NEW YORK (AP) — US. stocks are mostly falling Friday as fears about war in the Middle East collide in financial markets with hopes for stronger profits at big U.S. companies.
Oil prices leaped, 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 at the same time said their profits during the summer were better than feared, which offered hope on Wall Street for an earning reporting season that may deliver the first growth in a year.
All the push and pull left the S&P 500 0.5% lower in midday trading. The Dow Jones Industrial Average was virtually unchanged, as of noon Eastern time, and the Nasdaq composite was 1.2% lower.
Some of the strongest action was in the oil market, where a barrel of benchmark U.S. crude jumped 4.5% to $86.63. Brent crude, the international standard, rose 4.3% to $89.67 per barrel.
While the Gaza region is not a major producer of oil, the fear is that the violence could spill into the politics around the crude market and eventually lead to disruptions in the flow of petroleum.
Worries about the war also sent Treasury yields falling, which often happens when investors head for safer investments during times of stress. The yield on the 10-year Treasury fell to 4.62% from 4.70% late Thursday.
Yields also eased after another official at the Federal Reserve said the central bank may be done hiking its main interest rate following a blistering campaign that began early last year.
Patrick Harker, president of the Philadelphia Fed, said again Friday that he believes “we are at the point where we can hold rates where they are,” as long as economic and financial conditions continue on their current course.
The Fed has pulled its overnight interest rate to the highest level since 2001, up from virtually zero at the start of last year, in hopes of starving inflation of its fuel. Inflation has come down from its peak last summer, but it’s still high and raising worries that rates may stay elevated for longer than Wall Street would like.
High rates and longer-term bond yields knock down prices for all kinds of investments, while also slowing the overall economy.
Harker said the Fed can afford to stop hiking rates and see what happens, particularly with so many economic uncertainties out there. Besides the war in Gaza and oil prices, there are also worries about the effects of workers’ strikes across the country and Capitol Hill dysfunction that could result in another U.S. government shutdown.
“By doing nothing, we are still doing something,” Harker said about holding rates steady at their high levels. “And, actually, we are doing quite a lot.”
The two-year Treasury yield, which tends to move closely with expectations for Fed action, fell to 5.03% from 5.07% late Thursday.
A report on Friday suggested sentiment among U.S. consumers, whose spending has been one of the main drivers keeping the economy out of a recession, may be waning. A preliminary reading from the University of Michigan said consumer sentiment weakened by more than economists expected, primarily because of increased worries about inflation.
U.S. consumers are girding for inflation of 3.8% for the year ahead, up from 3.2% last month. It’s the highest such reading since May.
Helping to support Wall Street were JPMorgan Chase, Citigroup and Wells Fargo, which all reported stronger profit for the summer quarter than analysts expected.
JPMorgan Chase rose 3.3% after its profit for the third quarter climbed 35% from a year earlier. It benefited from a rise in interest rates, but its CEO Jamie Dimon also warned that “this may be the most dangerous time the world has seen in decades.”
Citigroup gained 2.6%, and Wells Fargo rose 3.3% after they likewise topped analysts’ expectations for profit during the summer quarter. Bank customers continue to borrow, even at higher interest rates, as consumers put more and more expenses on their credit cards.
UnitedHealth Group also beat Wall Street’s profit expectations, and its stock climbed 2.2%.
Dollar General jumped to one of the biggest gains in the S&P 500, up 10%, after it said Todd Vasos will be returning as CEO.
On the losing end 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 stronger profit for the latest quarter than analysts expected.
BlackRock said all the uncertainty around financial markets and the outlook for interest rates helped drive clients to pull some…
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