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Financial Markets 03/30 15:03
NEW YORK (AP) -- U.S. stocks are sinking again Monday as oil prices keep
climbing because of uncertainty about when the war with Iran could end.
The S&P 500 fell 0.7% and deepened its losses since the war began to pull
9.3% below its record set early this year. The Dow Jones Industrial Average was
down 50 points, or 0.1%, as of 3:15 p.m. Eastern time, and the Nasdaq composite
was 1.1% lower.
Caution was prevalent throughout financial markets. After jumping to an
initial gain of 0.9%, the S&P 500 quickly erased nearly all of it before
seesawing lower. Stock indexes rose in Europe but fell sharply in some Asian
markets, while the price for a barrel of benchmark U.S. crude rose 3.3% to
settle at $102.88
The mixed movements followed a whirlwind of action in the war over the
weekend, including an entry into the fighting by Houthi rebels in Yemen. The
main issue for investors is whether oil and natural gas can resume their full
flow from the Persian Gulf to customers worldwide and prevent a brutal blast of
inflation.
Shortly before the U.S. stock market opened for trading Monday, President
Donald Trump said on his social media network that "great progress has been
made" with "A NEW, AND MORE REASONABLE, REGIME to end our Military Operations
in Iran."
But he also threatened the possibility of "blowing up and completely
obliterating" Iranian power plants if a deal is not reached shortly and if the
Strait of Hormuz, an integral waterway for the flow of oil, is not opened
immediately.
The statement fit and condensed last week's pattern, where Trump would tout
progress being made in talks and offer some optimism for the market, only for
doubts to rise quickly afterward about whether the war can end soon.
All the back and forth has some investors saying they're giving Trump's
pronouncements less weight than before. But stock prices are nevertheless
cheaper than they were before the war, which has some investors waiting for an
opportune time to buy.
The S&P 500 is roughly 9% below its all-time high, which was set in January.
The Dow and Nasdaq both finished last week more than 10% below their records, a
steep-enough fall that professional investors call it a "correction."
Taking into account how much profits are expected to grow in the coming year
for companies in the S&P 500, the index looks roughly 17% cheaper than before
the war, by one measure. That's in a similar range as where prior growth scares
for the market ended, as long as they didn't result in a recession or the
Federal Reserve hiking interest rates, according to strategists at Morgan
Stanley.
That's one of the signs that the strategists led by Michael Wilson point to
as "growing evidence the S&P 500 correction is getting closer to its ending
stages."
Of course, the Federal Reserve could upset that if it decides oil prices are
threatening to stay high for long enough that it needs to raise interest rates.
Higher interest rates would help keep a lid on inflation, but they would also
slow the economy and push down on prices for all kinds of investments.
Treasury yields have been leaping in the bond market since the war began
because of such worries, but they eased somewhat on Monday.
The yield on the 10-year Treasury fell to 4.34% from 4.44% late Friday.
That's a significant move for the bond market and offers some breathing room
for Wall Street. But it remains far above its 3.97% level from before the war.
On Wall Street, Sysco fell 15.5% to help lead the market lower after it said
it was buying Jetro Restaurant Depot for $21.6 billion in cash and enough Sysco
shares to value the company at about $29.1 billion.
Alcoa rose 6.5% for one of the market's biggest gains on speculation it
could get more business after attacks damaged rival aluminum facilities in the
Middle East over the weekend.
In stock markets abroad, the FTSE 100 in London climbed 1.6%, and the CAC 40
in Paris rose 0.9%. That followed drops of 3% for Seoul's Kospi, 2.8% for
Tokyo's Nikkei 225 and 0.8% for Hong Kong's Hang Seng.
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AP Business Writers Yuri Kageyama and Matt Ott and AP journalist Ayaka
McGill contributed to this report.
___
This story has been corrected to show that the S&P 500 finished last week
8.7% below its record.
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