Financial Markets                      03/19 15:35

   

   NEW YORK (AP) -- A roller-coaster day for oil prices showed how they're 
dictating where financial markets and maybe even the global economy are 
heading. Stocks tumbled in Europe and Asia when oil prices shot higher early on 
Thursday, but U.S. stocks pared their sharp losses as the day progressed and 
oil prices fell back.

   The morning began with the shock of Brent crude, the international standard, 
briefly rising above $119 per barrel, up from roughly $70 before the war with 
Iran began.

   The jump followed intensified attacks by Iran on oil and gas facilities 
around the Persian Gulf in response to an Israeli attack on an important 
Iranian natural gas field. They worsened fears that the war could knock out oil 
and gas production in the Middle East for a long time, which would mean high 
prices could last a while and cause inflation to rip higher around the world.

   Stock indexes dropped 3.4% in Japan, 2.8% in Germany and 2.7% in South 
Korea. But oil prices pared their big gains as the day progressed, the latest 
in their hour-to-hour swings since the war began.

   Brent oil settled at $108.65, up only 1.2% from the day before, and then 
eased further as trading continued. After briefly topping $101, a barrel of 
benchmark of benchmark U.S. crude settled at $96.14 and then fell toward $94.

   That helped stocks on Wall Street pare their own losses, which were already 
more modest than in Europe and Asia because U.S. companies are less reliant on 
oil from the Middle East.

   The S&P 500 finished with a dip of 0.3% after coming back from an early loss 
of 1%. It even briefly turned higher in the last hour of trading. The Dow Jones 
Industrial Average dropped 203 points, or 0.4%, and the Nasdaq composite fell 
0.3%.

   President Donald Trump and countries around the world have made moves to 
stem the spike in oil prices. But they're mostly short-term fixes, and markets 
want to see less risk for oil and gas fields around the Gulf and a clearance of 
the Strait of Hormuz off Iran's coast, where a fifth of the world's oil 
typically sails.

   Late on Thursday, Israeli Prime Minister Benjamin Netanyahu said his country 
will hold off on any further attacks on the Iranian gas field, at Trump's 
request.

   Uncertainty about what will happen in the war has led to manic 
back-and-forth swings in the oil and stock markets since the war began nearly 
three weeks ago. The yo-yo movements also hit the bond market Thursday, as 
Treasury yields jumped in the morning with the price of oil and then eased back.

   The two-year Treasury yield got as high as 3.96% before receding to 3.79%, 
which is a major move for the bond market. The two-year yield tends to follow 
expectations for what the Federal Reserve will do with short-term interest 
rates.

   Oil prices have gotten so high that traders are nixing bets that the Federal 
Reserve will cut interest rates even once this year. It's a dramatic turnaround 
from before the war, when traders were betting heavily that the Fed would cut 
rates multiple times.

   Cuts to rates would give the economy and prices for investments a boost, and 
they're something Trump has angrily been calling for, but they would risk 
worsening inflation. The Fed on Wednesday decided to hold off on cutting 
interest rates at its latest meeting, and traders found comments from Chair 
Jerome Powell discouraging about the possibility for cuts in 2026.

   Now, traders are betting on a 73% chance that the Fed will hold rates steady 
this year or maybe even raise them, according to data from CME Group. Just a 
month ago, those same traders were betting on a 74% probability that the Fed 
would cut rates at least twice.

   Earlier in the day, the Bank of Japan, the European Central Bank and the 
Bank of England held their own interest rates steady.

   The 10-year U.S. Treasury yield held at 4.26%, where it was late Wednesday. 
But it's still well above its 3.97% level from before the war with Iran started.

   Higher Treasury yields have already sent rates for mortgages and other kinds 
of loans upward, and a report on Thursday showed sales of new U.S. homes 
unexpectedly weakened in January.

   Higher Treasury yields also grind down on prices for all kinds of 
investments, from stocks to crypto to gold. Gold sank 5.9% to settle at 
$4,605.70 per ounce. Silver fell even more and dropped 8.2%.

   Stocks of companies that mine such metals fell to some of Wall Street's 
sharpest losses. Newmont slumped 6.9%, and Freeport-McMoRan fell 3.3%.

   Micron Technology fell 3.8% even though it reported a blowout quarter of 
much higher profit and revenue than analysts expected. It gave back some of its 
big gain for the year so far, which came into the day at nearly 62% because of 
a worldwide shortage for computer memory.

   Helping to limit Wall Street's losses was Rivian Automotive, which rose 
3.8%. It announced a partnership where Uber will invest up to $1.25 billion in 
the company and expects to buy 10,000 autonomous robotaxis. Uber Technologies 
fell 1.7%.

   All told, the S&P 500 fell 18.21 points to 6,606.49. The Dow Jones 
Industrial Average dropped 203.72 to 46,021.43, and the Nasdaq composite sank 
61.73 to 22,090.69.

   ___

   AP Business Writers Elaine Kurtenbach, David McHugh and Matt Ott contributed.

   ---------

   itemid:1abeddf7c4bf19d1dc96b3f23c1de402