Financial Markets                      03/03 09:30

   

   NEW YORK (AP) -- A worldwide sell-off for stocks is slamming onto Wall 
Street Tuesday, and oil prices are leaping even higher as worries rise that the 
war with Iran is widening and may do more sustained damage to the global 
economy than feared.

   The S&P 500 dropped 2% in morning trading. The Dow Jones Industrial Average 
was down 1,048 points, or 2.1%, as of 10 a.m. Eastern time, and the Nasdaq 
composite was 2.1% lower.

   It was just a day ago that U.S. stocks opened with sharp losses, only to 
recover all of them and end the day with slight gains. But that was with the 
caveat that oil prices did not jump too high, like to more than $100 per barrel.

   On Tuesday, oil prices got closer to that mark and raised more alarms. The 
price for a barrel of Brent crude, the international standard, leaped another 
7.5% to $83.58. It was sitting near $70 less than a week ago. A barrel of 
benchmark U.S. crude, meanwhile, rose 7.6% to $76.64.

   Oil prices made the leap as Iran struck the U.S. Embassy in Saudi Arabia, 
part of a widening of targets that also includes areas critical to the world's 
oil and natural gas production. Worries are particularly high about what will 
happen to the Strait of Hormuz off the coast of Iran, a narrow passageway where 
roughly a fifth of the world's oil passes.

   Making things uncertain for markets are rising questions about how long this 
war may continue.

   Strikes by the United States and Israel have already killed Iranian Supreme 
Leader Ayatollah Ali Khamenei, but President Donald Trump has suggested that 
fighting may continue for weeks.

   Late Monday night, Trump said on his social media network, "Wars can be 
fought 'forever,' and very successfully" with the supply of munitions that the 
United States possesses.

   The jump for oil prices will worsen inflation, which is already too high for 
nearly everyone, and put more pressure on U.S. households and businesses by 
raising bills for gasoline and to ship products. The average price for a gallon 
of gasoline in the U.S. jumped 11 cents overnight to about $3.11, according to 
data from motor club AAA.

   That has the damage in stock markets so far centering on countries and 
companies that use a lot of oil, natural gas and other petroleum-based fuels.

   In South Korea, a big energy importer, the Kospi stock index plunged 7.2% 
for its worst day since two summers ago as markets reopened after a holiday on 
Monday. It had been setting records recently.

   Japan's Nikkei 225 dropped 3.1%, even as analysts say Japan has a sizable 
stockpile of energy lasting more than 200 days. In Europe, where prices for 
natural gas have soared, Germany's DAX lost 3.8%.

   On Wall Street, airlines continued to sink on worries about rising fuel 
bills. The war has also led to canceled flights and stranded passengers.

   United Airlines fell 5%, American Airlines sank 4.4% and Delta Air Lines 
dropped 4%.

   Among the few winners on Wall Street was Target, which rose 3.3% after 
reporting a better profit for the latest quarter than analysts expected. It 
also gave a forecasted range for profit this upcoming fiscal year whose 
midpoint was above analysts' expectations.

   In the bond market, Treasury yields climbed as worries rose about inflation 
worsening. The yield on the 10-year Treasury jumped to 4.09% from 4.05% late 
Monday and from just 3.97% on Friday.

   Higher yields can mean more expensive loans for U.S. households and 
businesses, for everything from mortgages to bond issuances. They also put 
downward pressure on prices for stocks and all kinds of other investments. 
Bitcoin dropped back below $67,000.

   When Treasurys are paying more in interest, they can also undercut the price 
of gold, which pays its investors nothing. Gold fell 4.9% Tuesday to $5,053.30, 
halting a strong run that had taken it above $5,300 as investors looked for 
safer places to park their money amid the war.

   High inflation could also tie the Federal Reserve's hands and keep it from 
cutting interest rates. The Fed had lowered rates several times last year and 
indicated more cuts were to come in 2026. That would help boost the economy and 
inflation, but lower rates can also worsen inflation.

   Traders are now pushing back their expectations further into the summer for 
when the Fed could resume cutting rates, according to data from CME Group. 
That's even though Trump has been calling for Fed officials in very angry and 
personal terms to cut rates now.

   ___

   AP Business Writers Yuri Kageyama and Matt Ott contributed.

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