Stocks fell broadly on Wall Street in midday trading Friday and oil prices surged after U.S. forces in Iraq killed a top Iranian general.
Financial stocks fell the most as investors bought up U.S. government bonds, sending their yields lower. Technology stocks, airlines and other companies that rely on consumer spending also took heavy losses as the market pulled back from record highs. Energy stocks gained the most as the price of U.S. oil headed higher. Defense contractors also notched gains.
Benchmark U.S. crude was up $1.28, or 2.1%, to $62.46 per barrel. It had been up 3.6% earlier in the day. Brent crude, used to price international oils, moved $1.86 higher to $68.11 per barrel.
The selling followed a broad decline in markets overseas following news that Gen. Qassem Soleimani, head of Iran’s elite Quds Force, was killed in an air attack at the Baghdad international airport early Friday.
President Donald Trump said the attack was ordered because Soleimani was plotting to kill many Americans. The strike marks a major escalation in the conflict between Washington and Iran, as Iran vowed “harsh retaliation” for the killing of the senior military leader.
The price of gold, which investors buy in times of uncertainty as a safe haven of value, was up 1.6% at $1,552.10 per ounce.
The sell-off erased most of the benchmark S&P 500 index’s gains for the week.
KEEPING SCORE: The S&P 500 was down 0.5% as of 11:54 a.m. Eastern time. The Dow Jones Industrial Average lost 201 points, or 0.7%, to 28,667. The Nasdaq dropped 0.6% and the Russell 2000 index of smaller company stocks gave up 0.5%.
BOND YIELDS: Bond prices rose. The yield on the 10-year Treasury fell to 1.80% from 1.88% late Thursday , a big move. Lower bond yields bring down the interest rates that banks charge for mortgages and other consumer loans, making them less profitable. That prompted a sell-off in bank shares. JPMorgan slid 1%, Bank of America dropped 1.7% and Citigroup lost 1.3%.
TURBULENCE: Airlines slumped as oil prices rose sharply. American Airlines Group dropped 3.1%, United Airlines Holdings slid 2.3% and Delta Air Lines lost 1.8%.
BETTING ON DEFENSE: Heightened tensions with Iran helped lift the stocks of defense contractors. Northrop Grumman climbed 4.7% and Lockheed Martin gained 4.1%.
OIL MARKET JITTERS: Energy companies made gains as oil prices surged over concerns that a U.S.-Iran conflict could disrupt global supplies. Occidental Petroleum rose 1.6% and Hess gained 2.3%.
DELIVERING: Tesla shares climbed 4.3% after the electric vehicle maker reported a 50% rise in deliveries for 2019.
COOL MOVE: Lamb Weston vaulted 11.1% after the frozen foods supplier’s fiscal second-quarter earnings and revenue beat Wall Street analysts’ forecasts.
MARKETS OVERSEAS: In Europe, Germany’s DAX tumbled 1.2%, while Italy’s FTSE MIB dropped 0.6%. Both countries are net oil importers with big manufacturing sectors. France’s CAC 40 was flat, while London’s FTSE gained 0.2%.
In Asia, Hong Kong’s Hang Seng lost 0.3%, while India’s Sensex lost 0.5%. Australia’s S&P-ASX 200 gained 0.6%. Japanese markets were closed.