Financial Markets                      03/19 09:26

   

   NEW YORK (AP) -- Oil prices shot up again Thursday because of the war with 
Iran, tightening their grip on the global economy and sending stock markets 
worldwide lower.

   Brent crude, the international standard, briefly rose above $119 per barrel 
in the morning before pulling back to $110.80, which is still a 3.2% rise from 
the prior day. A barrel of benchmark U.S. crude added 0.7% to $96.09 after Iran 
intensified its attacks on oil and gas facilities around the Persian Gulf in 
response to an Israeli attack on an important Iranian natural gas field.

   The attacks added to fears that fighting may knock out production of oil and 
gas in the Gulf 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, 2.7% in South Korea, 2.7% in Germany 
and 2.6% in the United Kingdom. On Wall Street, where trading began after Brent 
crude's price pared its big gain and where companies are less reliant on oil 
from the Gulf, the losses were more modest.

   The S&P 500 fell 0.4% and is on track for a fourth straight losing week, 
which would be its longest such streak in a year. The Dow Jones Industrial 
Average was down 188 points, or 0.4%, as of 10 a.m. Eastern time, and the 
Nasdaq composite was 0.6% lower.

   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 when markets 
want to see less risk for Gulf oil fields and a clearance of the Strait of 
Hormuz off Iran's coast, where a fifth of the world's oil typically sails.

   Worries are so high about oil prices that traders are now even betting on a 
slim chance that the Federal Reserve may have to hike interest rates this year. 
It's a dramatic turnaround from just a month ago, when traders were betting 
heavily that the Fed would cut rates multiple times this year.

   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 nearly 5% chance the Fed could hike its main 
interest rate by the end of the year and a roughly 80% chance that it will at 
least hold steady, according to data from CME Group. Just a month ago, those 
same traders were betting on a 74% probability of two or more cuts.

   That drove Treasury yields higher, and the two-year Treasury yield touched 
its highest level since the summer. It rose to 3.81% from 3.76% late Wednesday.

   The more widely followed 10-year Treasury yield held at 4.26%, where it was 
late Wednesday, up from just 3.97% before the war with Iran started. Earlier in 
the day, the Bank of Japan, the European Central Bank and the Bank of England 
held their own interest rates steady.

   Besides the threat of higher inflation, a couple solid reports on the U.S. 
economy also helped to lift yields. One said fewer U.S. workers applied for 
unemployment benefits last week, when economists were expecting a slight rise. 
Another said growth for manufacturing in the mid-Atlantic area unexpectedly 
accelerated.

   Besides sending rates for mortgages and other kinds of loans upward, higher 
Treasury yields also grind down on prices for all kinds of investments, from 
stocks to crypto to gold.

   Gold dropped 6.6% to $4,575.60 per ounce and touched its lowest price since 
early February. Silver fell even more, dropping 11.9%.

   Stocks of companies that mine such metals fell to some of Wall Street's 
sharpest losses. Newmont dropped 6.7%, and Freeport-McMoRan sank 6.1%.

   Micron Technology fell 4.1% and helped lead the market lower 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 jumped 
8.5%. 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 
added 0.2%.

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

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