Stock market today: US stocks remain unsettled amid hopes for easing tensions in the Middle East

NEW YORK (AP) — U.S. stocks are faltering and oil prices are falling Monday on hopes that international efforts to calm rising tensions in the Middle East it can help.

The S&P 500 fell 0.2% in afternoon trading. It had previously risen as much as 0.9%, partly thanks to support from the latest US report. economy to fly by Expectations. The benchmark is coming out of a last week's losswhich was the worst since October.

The Dow Jones Industrial Average was up 2 points, or less than 0.1%, as of 1:17 p.m. ET, and the Nasdaq composite was down 0.5%.

Goldman Sachs rose 2.9%, helping financial companies achieve some of the market's biggest gains after reporting stronger earnings earlier in the year than analysts expected. The pressure is on companies in general to generate higher profits because the other lever that sets stock prices, interest rates, appears less likely to offer support in the short term.

Some stock market jitters eased and the price of benchmark US crude oil fell 1.2% as political leaders around the world urged Israel not to retaliate after Iran's attack on Saturday involving hundreds of drones, ballistic missiles and cruise missiles.

Financial markets had been nervous heading into the weekend. The concern was that an attack by Iran could widen Israel's war against Hamas and ultimately restrict the flow of crude oil. But Israel said 99% of the drones and missiles were intercepted as diplomats urged a reduction in tension and the US administration made clear it did not support a broader war with Iran.

Brent crude, the international standard, fell 1.1% to $89.41 a barrel.

This year's rise in oil prices has raised concerns about a knock-on effect on inflation, which has remained stubbornly high. After cooling off solidly last year, inflation has consequently are above forecasts in every month so far in 2024. That has pushed investors to give up hope of an imminent interest rate cuts. Broadly speaking, they forecast only one or two cuts this year, according to CME Group data, below six or more at the beginning of this year. Some are preparing not to cut rates.

Not only do higher oil prices threaten to keep inflation and interest rates higher, but so does a remarkably resilient U.S. economy. A report on Monday showed that American shoppers increased their spending at retailers last month much more than economists expected. Said expenditure, which has been supported by a labor market still stronghas pushed many economists to at least delay their forecasts about a possible recession due to high interest rates.

The downside to such strength is that it likely delays interest rate cuts, which Wall Street craves because they lift the prices of stocks and all types of investments, while easing pressure on the economy. But the advantage of a strong economy is that it hopefully drives strong profit growth for companies.

"If inflation is sticky due to momentum in the economy, that's not necessarily bad for stocks," Bank of America strategists led by Ohsung Kwon wrote in a BofA Global Research report. “But stagflation is,” referring to the painful combination of a stagnant economy and high inflation.

M&T Bank jumped 4.9%, one of the biggest gains in the S&P 500 after reporting first-quarter earnings that were slightly above analysts' expectations. He also said it slightly reduced the amount of pain that would be needed if the hard-pressed commercial real estate industry took a drastic plunge.

Charles Schwab rose 2.7% after also beating analysts' forecasts for its profits last quarter.

Strategists at Wells Fargo Investment Institute raised their forecast for where the S&P 500 could end up this year, in part because the resilience of the U.S. economy pushed them to upgrade their forecasts. While they expect the market to be choppy after their big gains since October, they say a growing U.S. economy should boost company sales.

Utility stocks and real estate investment trusts had some of the biggest losses. They pay relatively high dividends and typically come under pressure when bond yields rise because that could drive away income-seeking investors.

Treasury yields rose following the strong US retail sales report. The 10-year Treasury yield rose to 4.63% from 4.52% late Friday. The two-year yield, which is closer to expectations for action by the Federal Reserve, rose to 4.93% from 4.89%.

American Water Works fell 0.8% and office owner Boston Properties fell 2.9%.

In foreign stock markets, indices were mixed across Europe. They struggled more in Asia, where Hong Kong's Hang Seng and Tokyo's Nikkei 225 fell 0.7%.

AP writers Matt Ott and Zimo Zhong contributed.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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