Oil Prices Rise as Iran Fires Missiles at Israel

Dow, S&P 500 fall back from their records
By Newser Editors and Wire Services
Posted Oct 1, 2024 3:40 PM CDT
Oil Prices Rise as Iran Fires Missiles at Israel
Marathon Oil's Los Angeles Refinery is pictured in Carson, California.   (AP Photo/Damian Dovarganes)

US stocks retreated from their recordsTuesday after Iran fired missiles into Israel, a sharp escalation of tensions in the Middle East that investors fear could lead to disruptions in the flow of oil.

  • The S&P 500 fell 53.73 points, or 0.9%, to 5,708.75.
  • The Dow Jones Industrial Average fell 173.18 points, or 0.4%, to 42,156.97.
  • The Nasdaq composite fell 278.81 points, or 1.5%, to 17,910.36.
Oil prices jumped amid speculation about how Israel and the United States may respond to Iran's move. White House National Security Adviser Jake Sullivan called Iran's missile attack a "significant escalation."

While Israel is not a major producer of oil, Iran is, and the potential for a wider conflict could affect other, neighboring producers of crude. The price for a barrel of benchmark US crude rose 2.4% to settle at $69.83. Brent crude, the international standard, rallied 2.6% to $73.56 per barrel. That in turn sent shares of oil-and-gas producers to some of the stock market's biggest gains. ConocoPhillips rose 3.9%, and Exxon Mobil climbed 2.3%, the AP reports.

Shares of defense contractors also rallied. Northrop Grumman rose 3%, and RTX added 2.7%. RTX partners with Israeli company Rafael Advanced Defense Systems to make the "Iron Dome" air defense system that Israel's government uses. The majority of US stocks, though, sank. The two biggest stocks in the market, Apple and Microsoft, both fell at least 2.2%. "Stocks are vulnerable as we are at all-time highs, and valuations are stretched prior to the election," according to Jay Hatfield, CEO at Infrastructure Capital Advisors.

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A discouraging report arrived Tuesday, showing US manufacturing weakened by more in September than economists expected. Manufacturing has been one of the areas of the economy hurt most by high interest rates, and the report from the Institute for Supply Management said demand continues to slow. A separate report was potentially more encouraging. It showed US employers were advertising more than 8 million job openings at the end of August. That was slightly more than July's number and better than what economists were expecting. A more comprehensive report on hiring will arrive on Friday, when the government details how many jobs US employers created in September. (More stock market stories.)

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