Financial Markets                      06/13 15:48

   

   NEW YORK (AP) -- Oil prices leaped, and stocks slumped Friday on worries 
that escalating violence following Israel's attack on Iranian nuclear and 
military targets could damage the flow of crude around the world, along with 
the global economy.

   The S&P 500 sank 1.1% and wiped out what had been a modest gain for the 
week. The Dow Jones Industrial Average dropped 769 points, or 1.8%, and the 
Nasdaq composite lost 1.3%.

   The strongest action was in the oil market, where the price of a barrel of 
benchmark U.S. crude jumped 7.3% to $72.98. Brent crude, the international 
standard, rose 7% to $74.23 for a barrel.

   Iran is one of the world's major producers of oil, though sanctions by 
Western countries have limited its sales. If a wider war erupts, it could slow 
the flow of Iran's oil to its customers and keep the price of crude and 
gasoline higher for everyone worldwide.

   Beyond the oil coming from Iran, analysts also pointed to the potential for 
disruptions in the Strait of Hormuz, a relatively narrow waterway off Iran's 
coast. Much of the world's oil that's been pulled from the ground moves through 
it on ships.

   Past attacks involving Iran and Israel have seen prices for oil spike 
initially, only to fall later "once it became clear that the situation was not 
escalating and there was no impact on oil supply," according to Richard 
Joswick, head of near-term oil at S&P Global Commodity Insights.

   That has Wall Street waiting to see what will come next. U.S. stock prices 
dropped to their lowest points for the day after Iran launched ballistic 
missiles toward Israel.

   For now, the price of oil has jumped, but it's still lower than it was 
earlier this year. "This is an economic shock that nobody really needs, but it 
is one that seems more like a shock to sentiment than to the fundamentals of 
the economy," said Brian Jacobsen, chief economist at Annex Wealth Management.

   That in turn sent U.S. stocks to a loss that was notable in size but outside 
their top 15 for the year so far.

   Companies that use a lot of fuel as part of their business and need their 
customers feeling confident enough to travel fell to some of the sharpest 
losses. Cruise operator Carnival dropped 4.9%. United Airlines sank 4.4%, and 
Norwegian Cruise Line Holdings fell 5%.

   They helped overshadow gains for U.S. oil producers and other companies that 
could benefit from increased fighting between Israel and Iran.

   Exxon Mobil rose 2.2%, and ConocoPhillips gained 2.4% because the leaping 
price of crude portends bigger profits for them.

   Contractors that make weapons and defense equipment also rallied. Lockheed 
Martin, Northrop Grumman and RTX all rose more than 3%.

   The price of gold climbed as investors searched for safer places to park 
their cash. An ounce of gold added 1.4%.

   Often, prices for Treasury bonds will likewise rise when investors are 
feeling nervous. That's because U.S. government bonds have historically been 
seen as some of the safest options around. But Treasury prices fell Friday, 
which in turn pushed up their yields, in part because of worries that a spike 
in oil prices could drive inflation higher.

   Inflation has remained relatively tame recently, and it's near the Federal 
Reserve's target of 2%, but worries are high that it could be set to accelerate 
because of President Donald Trump's tariffs.

   That sent the yield on the 10-year Treasury up to 4.41% from 4.36% late 
Thursday. Higher yields can tug down on prices for stocks and other 
investments, while making it more expensive for U.S. companies and households 
to borrow money.

   A better-than-expected report Friday on sentiment among U.S. consumers also 
helped drive yields higher. The preliminary report from the University of 
Michigan said sentiment improved for the first time in six months after Trump 
put many of his tariffs on pause, while U.S. consumers' expectations for coming 
inflation eased.

   On Wall Street, Adobe fell 5.3% even though the company behind Photoshop 
reported a stronger profit for the latest quarter than Wall Street expected. 
Analysts called it a solid performance but said investors may have been looking 
for some bigger revenue forecasts for the upcoming year.

   Shares of Brazilian meat giant JBS fell 3.9% as they made their debut on the 
New York Stock Exchange. The company wants to increase access to its shares 
among global investors, despite criticism from environmental groups, U.S. 
lawmakers and others who noted JBS' record of corruption, monopolistic behavior 
and environmental destruction.

   All told, the S&P 500 fell 68.29 points to 5,976.97. The Dow Jones 
Industrial Average dropped 769.83 to 42,197.79, and the Nasdaq composite sank 
255.66 to 19,406.83.

   In stock markets abroad, indexes slumped across Europe and Asia. France's 
CAC 40 lost 1%, and Germany's DAX dropped 1.1% for two of the larger losses.

   ___

   McHugh reported from Frankfurt, Germany, and Junzhe reported from Hong Kong. 
AP Business Writers Matt Ott and Dee-Ann Durbin contributed.

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