Financial Markets                      03/12 09:32

   

   NEW YORK (AP) -- With no clear end in sight, the war with Iran is sending 
oil prices back to $100 per barrel and stocks sinking worldwide on Thursday.

   The S&P 500 fell 1.1% and is returning to big swings following a couple days 
of relative calm. The Dow Jones Industrial Average was down 588 points, or 
1.2%, as of 10 a.m. Eastern time, and the Nasdaq composite was 1.4% lower.

   The center of action was again the oil market, where the price of a barrel 
of Brent crude, the international standard, got as high as $101.59 overnight 
before pulling back to $99.50, an 8.1% rise. Worries remain high that the war 
could block the production and transport of oil in the Persian Gulf for a long 
time, which in turn could cause a debilitating surge of inflation for the 
global economy.

   Iran has escalated its attacks, aimed at generating enough economic pain to 
pressure the United States and Israel to end the war they began, targeting oil 
fields and refineries. Iran's actions have effectively stopped cargo traffic 
through the narrow Strait of Hormuz, where a fifth of the world's oil typically 
sails. That has oil producers cutting production because their crude has 
nowhere to go.

   Countries around the world are trying to make up for that, and the 
International Energy Agency said Wednesday that its members would release a 
record amount of crude, 400 million barrels, from their stockpiles built for 
such emergencies.

   But such moves are short-term fixes, and they do not clear the long-term 
risks. Analysts have said that if the Strait of Hormuz remains closed, oil 
prices could jump to $150.

   To be sure, the U.S. stock market has a history of bouncing back relatively 
quickly from military conflicts in the Middle East and elsewhere, as long as 
oil prices don't stay too high for too long. Even with all the swings up and 
down of the last couple weeks, many rocking markets hour to hour, the S&P 500 
is still just 4% below its all-time high set in January.

   What's made this jump for oil prices so frightening is not only the degree 
-- prices jumped near $120 earlier this week to their highest level since 2022 
-- but that they're also occurring during an uncertain time for the economy.

   Last month's report on hiring by U.S. employers was surprisingly weak, which 
raised worries about a possible worst-case scenario for the economy called 
"stagflation." That's one where economic growth stagnates while inflation 
remains high, a miserable mix that the Federal Reserve has no good tools to fix.

   A more encouraging signal on the economy arrived Thursday. A report said 
that the number of U.S. workers applying for unemployment benefits inched lower 
last week. That's a sign of that layoffs potentially are remaining low around 
the country.

   Dollar General, meanwhile, reported better profit and revenue for the latest 
quarter than analysts expected. But the retailer with relatively low prices, 
whose customers often have the least cushion to absorb higher gasoline prices, 
gave forecasts for revenue this upcoming year that indicated a slowdown in 
growth. Its stock tumbled 7.8%.

   Some of the worst losses on Wall Street again hit companies with already big 
fuel bills. United Airlines sank 33.7%, and cruise-ship operator Carnival fell 
6%.

   In stock markets abroad, indexes also fell across Europe and Asia.

   Japan's Nikkei 225 fell 1%, and France's CAC 40 lost 0.7% for two of the 
world's bigger moves.

   In the bond market, Treasury yields continued to climb because of upward 
pressure from rising oil prices. The yield on the 10-year Treasury rose to 
4.22% from 4.21% late Wednesday and from just 3.97% before the war started.

   Higher yields help make all kinds of borrowing more expensive, such as 
mortgages for potential U.S. homebuyers and bond offerings for companies 
looking to expand. They also push down on prices for all kinds of investments, 
from stocks to crypto.

   Because of the spike for oil prices, traders have pushed back forecasts for 
when the Fed could resume its cuts to interest rates. President Donald Trump 
has been angrily calling for such cuts, which would give the economy and job 
market a boost but also potentially worsen inflation.

   A barrel of benchmark U.S. crude rose 8.4% to $94.57.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

   ---------

   itemid:45f78a8cfe9a5c7e1a2279150a2f90f1