Stocks fall as oil prices surge following Israel attack on Iran
Stocks are down on Friday, with oil prices surging in the wake of the Israel's military strike on Iran.
The S&P 500 slid 48 points, or 0.5%, to 5,998 points in early trading, while the Dow Jones Industrial Average dropped 559 points, or 1.3%, to 42,409 points. The Nasdaq Composite shed 0.8%.
The market slide comes after Israel launched strikes on Iran's nuclear sites and other targets early Friday, the start of what Israel said could be a days-long attack. Iran responded by launching over 100 drones, which Israel claimed it was able to mostly intercept.
The strikes come as President Trump seeks to rein in Iran's nuclear capabilities. The U.S. and Iran are scheduled to meet Sunday in Oman, as part of a series on ongoing talks.
"The initial market response has been largely contained, but the risk of a broader military conflict certainly cannot be dismissed," said Jeff Buchbinder, chief equity strategist at LPL Financial. "Iran has begun to retaliate and will continue to do so. This phase of the conflict will likely last several weeks at least."
The oil market had an even stronger reaction on Friday, with U.S. benchmark crude oil increasing $4.73 or 6.9% to $72.77 per barrel. Bent crude, the international standard, climbed $4.58 to $73.94 per barrel. If the conflict between Israel and Iran continues, it could impact the flow of oil from Iran, which is one of the largest producers of the natural resource in the world.
One concern would be if Iran closes the Strait of Hormuz, through which millions of barrels of oil flow each day. But that's probably off the table for now, according to Kristian Kerr, head of macro strategy at LPL Financial.
"We think this is unlikely for now given Iran's need to maintain oil sales to China," Kerr said in an email.
In a research note, Capital Economics economists said the risk to oil prices is "more balanced" than previously thought.
The Middle East tensions also affect markets beyond oil, said Joy Yang, head of index product management at MarketVector Indexes, noting a decline in Bitcoin prices and a rally in defense stocks, as airline stocks fall.
Airlines, which use a lot of fuel as part of their business and need their customers feeling confident enough to travel, experienced sharp losses. United Airlines lost 5.2%, Delta Air Lines gave up 4.5% and Norwegian Cruise Line Holdings dropped 2.9%.
Boeing shares are down 1% after a 5% dip Thursday following a crash in India involving one of its 787-8 Dreamliner planes.
The Associated Press contributed to this report.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at "60 Minutes," CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
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