US Stocks Dip Wednesday

NEW YORK (AP) -- Wall Street dropped Wednesday after rising Treasury yields tightened the vise further on the stock market and big U.S. companies delivered a mixed set of profit reports. Worries about war in the Middle East also dragged on the market.

The S&P 500 sank 1.3%. The Dow Jones Industrial Average dropped 332 points, or 1%, and the Nasdaq composite lost 1.6%.

Crude oil prices jumped sharply overnight following a deadly explosion at a hospital in the Gaza Strip, which sparked protests across the Middle East. Gold, meanwhile, rose as investors continue to look for safer investments following the Oct. 7 surprise attack on Israel by Hamas.

On Wall Street, United Airlines slumped 9.7% after it showed how big a hit to profits it may take because of surging fuel prices and the suspension of flights to Tel Aviv. It gave a profit forecast for the last three months of the year that fell well short of analysts' expectations.

The forecast overshadowed United's reporting a bigger profit for the summer than Wall Street had predicted. Other airlines fell in concert, with American Airlines down 4.9% and Delta Air Lines down 4.4%.

Morgan Stanley also tumbled, down 6.8%, even though it likewise reported a bigger profit for the latest quarter than analysts expected. Investors focused on a weaker-than-expected showing by the company's wealth management business, analysts said.

On the winning side of Wall Street was Procter & Gamble, the giant behind such brands as Charmin, Febreze and Oral-B. It rose 2.6% after reporting stronger profit than expected for the latest quarter. Its revenue rose after it increased prices for its products.

Nasdaq climbed 4% for one of the market's bigger gains after reporting stronger profit than expected. It benefited from high-profile stock debuts on its trading exchange, as well as growth for its anti-financial crime business.

All told, the S&P 500 fell 58.60 to 4,314.60. The Dow dropped 332.57 to 33,665.08, and the Nasdaq sank 219.44 to 13,314.30.

The earnings reporting season for the summer is still in its early days, and the broad expectation is for S&P 500 companies to say their overall earnings per share rose last quarter for the first time in a year.

Such growth in profits is essential for the stock market to keep rising, particularly when the other big factor that drives stock prices is pushing the other way.

Treasury yields in the bond market have been on a steady march higher as investors accept a new normal where the Federal Reserve will likely keep interest rates high to get inflation under control. High rates and yields hurt prices for stocks and other investments.

The yield on the 10-year Treasury rose to 4.89% from 4.84% late Tuesday and from less than 3.50% during the spring. It topped 4.90% earlier in the day for the first time since since 2007.

Financial markets "are increasingly concerned that the next move higher could be on the cusp of 5%, and whether the broader economy is equipped to assimilate" the higher costs to raise money, said Quincy Krosby, chief global strategist for LPL Financial.

Yields have climbed as the U.S. economy has remained remarkably resilient, even after the Federal Reserve raised its main interest rate to the highest level since 2001. That strength has a large group of investors believing the Fed may pull off the balancing act of slowing the economy through high rates just enough to smother high inflation but not so much as to cause a painful recession.

Still, investors remain cautious. Global fund managers are holding more cash to protect themselves, up to 5.3% of their total portfolios in October from 4.9%, according to the latest survey by Bank of America.

A big threat for the global economy is what oil prices do to inflation amid the latest war between Hamas and Israel.

In the oil market, a barrel of U.S. crude climbed $1.66 to settle at $88.32 per barrel. It approached $90 early in the morning before paring its gain. Brent crude, the international standard, rose $1.60 to $91.50 after earlier nearing $93 per barrel.

The spark for the jump was a blast at a Gaza hospital that reportedly killed hundreds. Hamas blamed it on an Israeli airstrike, while the Israeli military blamed a rocket misfired by members of another Palestinian militant group. President Joe Biden seemed to suggest it wasn't Israel.

The fear in financial markets is that the war will draw in big oil-producing nations, such as Iran, and lead to disruptions of supply.

Iranian Foreign Minister Hossein Amirabdollahian called on Muslim nations Wednesday to launch an oil embargo on Israel after the explosion at the hospital.

Gold rose $32.60 to settle at $1,968.30 per ounce as investors looked for safer things to own.

In stock markets abroad, indexes slumped in much of Europe after ending mixed in Asia.

China reported Wednesday that its economy grew at a 4.9% annual pace from July through September. That's down from 6.3% growth in the previous quarter but better than economists feared for the world's second-largest economy.