US stocks fall as Middle Eastern war lifts oil prices

NEW YORK: Wall Street stocks were moderately lower early Monday as the war initiated by US-Israeli attacks on Iran expanded across the Middle East, lifting oil prices.

About 20 minutes into trading, the Dow Jones Industrial Average was down 0.7% at 48,661.35.

The broad-based S&P 500 shed 0.5% to 6,845.44, while the tech-rich Nasdaq Composite Index dropped 0.4% to 22,575.52.

The Israeli military said it began a new “broad strike” on Tehran, while Gulf monarchies threatened to retaliate and tankers were attacked off Oman.

Oil prices surged about 8%.

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“If oil prices stay high, that means inflation could go higher,” said Adam Sarhan, noting such a move would likely delay or end the chance of additional Federal Reserve interest rate cuts.

“If this conflict spreads (…) and it causes extended turmoil in the Middle East, that’s not going to be a good sign for the market,” Sarhan added.

But Briefing.com analyst Patrick O’Hare characterized the stock market’s reaction thus far as relatively muted.

“The major indices will open lower, but they won’t open lower in proportion to the weight of the combat news, because participants are not convinced yet the military action will fuel disarray for the global economy,” O’Hare said.

Among sectors, airline and travel stocks retreated while shares of defense companies and petroleum producers pushed higher.