NEW YORK (AP) โ United States. Stocks are mostly falling on Friday as fears about a war in the Middle East collide in financial markets with hopes of higher profits for big American companies.
Oil prices rose and Treasury yields fell after Israel's military ordered the evacuation of northern Gaza ahead of an expected ground invasion, according to the United Nations, which warned of potentially "devastating humanitarian consequences." But several of the biggest U.S. banks said at the same time that their summer profits were better than feared, offering hope on Wall Street for an earnings reporting season that could deliver the first growth in a year.
All the back-and-forth left the S&P 500 down 0.5% in midday trading. The Dow Jones Industrial Average was virtually unchanged at midday ET, and the Nasdaq composite was down 1.2%.
Some of the strongest action came in the oil market, where a barrel of benchmark U.S. crude rose 4.5% to $86.63. Brent crude, the international standard, rose 4.3% to $89.67 a barrel.
While the Gaza region is not a major oil producer, the fear is that the violence could spill over into the politics around the crude oil market and eventually lead to disruptions in the flow of oil.
Concerns about war also sent Treasury yields tumbling, which typically happens when investors look for safer investments in times of stress. The 10-year Treasury yield fell to 4.62% from 4.70% late Thursday.
Yields also declined after another Federal Reserve official said the central bank may have finished raising its main interest rate following a breakneck campaign that began early last year.
Patrick Harker, president of the Philadelphia Federal Reserve, said again Friday that he believes โwe are at the point where we can keep rates where they areโ as long as economic and financial conditions continue on their current course.
The Federal Reserve has raised its overnight interest rate to the highest level since 2001, from virtually zero early last year, hoping to starve inflation of its fuel. Inflation has eased from its peak last summer, but remains high, raising concerns that rates could remain elevated longer than Wall Street would like.
High rates and longer-term bond yields drive down the prices of all types of investments, while slowing the overall economy.
Harker said the Federal Reserve can afford to stop raising rates and see what happens, particularly with so many economic uncertainties out there. In addition to the war in Gaza and oil prices, there are also concerns about the effects of nationwide worker strikes and Capitol dysfunction that could result in another US government shutdown.
"By doing nothing, we're still doing something," Harker said of keeping rates stable at their high levels. "And we're actually doing quite a bit."
The two-year Treasury yield, which tends to move in line with expectations for Fed action, fell to 5.03% from 5.07% on Thursday.
A report on Friday suggested that confidence among American consumers, whose spending has been one of the main factors keeping the economy out of a recession, could be declining. A preliminary reading from the University of Michigan said consumer confidence weakened more than economists expected, mainly due to heightened concerns about inflation.
American consumers are bracing for 3.8% inflation next year, up from 3.2% last month. It is the highest reading since May.
Helping to support Wall Street were JPMorgan Chase, Citigroup and Wells Fargo, which reported stronger summer quarter earnings than analysts expected.
JPMorgan Chase rose 3.3% after its third-quarter earnings rose 35% from a year earlier. It benefited from a rise in interest rates, but its chief executive, Jamie Dimon, also warned that โthis may be the most dangerous time the world has seen in decades.โ
Citigroup gained 2.6% and Wells Fargo rose 3.3% after they also beat analysts' profit expectations during the summer quarter. Bank customers continue to borrow money, even at higher interest rates, as consumers charge more and more expenses to their credit cards.
UnitedHealth Group also beat Wall Street earnings expectations and its shares rose 2.2%.
Dollar General jumped to one of the biggest gains in the S&P 500, up 10%, after it said Todd Vasos will return as CEO.
On the losing side of Wall Street were travel-related companies. Norwegian Cruise Line fell 4.1% and Delta Air Lines sank 2.2%.
Investment giant BlackRock fell 1.2%, even though it reported higher profits for the latest quarter than analysts expected.
BlackRock said all the uncertainty around financial markets and the outlook for interest rates helped clients withdraw some money from long-term investments while stashing away cash, which is ultimately paying higher returns.
In foreign stock markets, indices fell across Europe after much of Asia.
Hong Kong's benchmark index fell 2.3% and stocks fell 0.6% in Shanghai as the recovery in the world's second-largest economy continues to falter.
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AP journalist Zimo Zhong contributed.
