Oil Prices Leap 6%, Stocks Fall on Worries About What Will Happen to the Crude Market

NEW YORK (AP) -- Oil prices are leaping, and stocks are falling Friday on worries that Israel's attack on Iranian nuclear and military targets could escalate further and damage the flow of crude around the world, along with the global economy.

The S&P 500 was down 0.9% in morning trading. The Dow Jones Industrial Average was down 601 points, or 1.4%, as of 10:05 a.m. Eastern time, and the Nasdaq composite was 0.9% lower.

The strongest action was in the oil market, where the price of a barrel of benchmark U.S. crude jumped 6.4% to $72.39. Brent crude, the international standard, rose 6.6% to $73.94 for a barrel.

Iran is one of the world's major producers of oil, though sanctions by Western countries have limited its sales. If a wider war erupts, it could slow the flow of Iran's oil to its customers and keep the price of crude and gasoline higher for everyone worldwide.

But past attacks involving Iran and Israel have seen prices for oil spike initially, only to fall later "once it became clear that the situation was not escalating and there was no impact on oil supply," according to Richard Joswick, head of near-term oil at S&P Global Commodity Insights.

That has Wall Street waiting to see what will come next. For now, the price of oil has jumped, but not to a price no one has seen, and it's still lower than it was earlier this year. "This is an economic shock that nobody really needs, but it is one that seems more like a shock to sentiment than to the fundamentals of the economy," said Brian Jacobsen, chief economist at Annex Wealth Management.

That in turn has U.S. stocks falling to give back some of the big recent gains that had brought them to the brink of their record. But the losses so far are not as bad as they've occasionally been earlier this year, when worries about President Donald Trump's tariffs injected even more uncertainty into financial markets.

Companies that use a lot of fuel as part of their business and need their customers feeling confident enough to travel fell to some of the sharper losses. United Airlines lost 4.7%, Delta Air Lines gave up 4.3% and Norwegian Cruise Line Holdings dropped 4.7%.

They helped overshadow gains for U.S. oil producers and other companies that could benefit from increased fighting between Israel and Iran.

Exxon Mobil rose 1.7%, and ConocoPhillips gained 2.7% because the leaping price of crude portends bigger profits for them.

Contractors that make weapons and defense equipment also rallied. Lockheed Martin, Northrop Grumman and RTX all rose at least 2%.

The price of gold climbed as investors searched for safer places to park their cash. An ounce of gold added 1.6% to $3,458.10.

Often, prices for Treasury bonds will likewise rise when investors are feeling nervous. That's because U.S. government bonds have historically been seen as some of the safest options around. But Treasury prices fell Friday, which in turn pushed up their yields, in part because of worries that a spike in oil prices could drive inflation higher.

Inflation has been remaining relatively tame recently, and it's near the Federal Reserve's target of 2%, but worries are high that it could be set to accelerate because of Trump's tariffs.

The yield on the 10-year Treasury rose to 4.39% from 4.36% late Thursday. A report suggesting an unexpectedly large increase in sentiment among U.S. consumers also helped to push yields higher. The preliminary report from the University of Michigan said sentiment improved for the first time in six months after Trump put many of his tariffs on pause, while expectations for coming inflation eased.

On Wall Street, Adobe fell 7% even though the company behind Photoshop reported a stronger profit for the latest quarter than Wall Street expected. Analysts called it a solid performance but said investors may have been looking for bigger increases to some of its revenue forecasts for the upcoming year.

Shares of Brazilian meat giant JBS fell 2.6% as they made their debut on the New York Stock Exchange. The company wants to increase access to its shares among global investors, despite criticism from environmental groups, U.S. lawmakers and others who noted JBS' record of corruption, monopolistic behavior and environmental destruction.

In stock markets abroad, indexes slumped across Europe and Asia. Germany's DAX lost 1.2%, and France's CAC 40 dropped 1.1% for two of the larger losses.

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McHugh reported from Frankfurt, Germany, and Junzhe reported from Hong Kong. AP Business Writer Matt Ott contributed.

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