Oil prices leap on worries about Iran war; US stocks trim sharp losses

By STAN CHOE, AP Business Writer NEW YORK (AP) — Oil prices leaped Monday on worries that war with Iran could clog the global flow of crude and make inflation even worse.

stocks, meanwhile, swung from sharp losses to a tiny gain.

Crude prices jumped more than 6%, which will likely mean higher prices soon at gasoline pumps.

That would hurt not only U.S.

households, whose spending makes up the bulk of the U.S.

economy, but also businesses with big fuel bills.

The S&P 500 fell as much as 1.2% at the start of trading, and cruise lines and airlines led the way lower.

stocks quickly erased those losses, in part because past military conflicts haven’t usually created sustained drops for the market, and the index finished the day with a gain of less than 0.1%.

The Dow Jones Industrial Average dipped 73 points, or 0.1%, and the Nasdaq composite rose 0.4%.

Both also came back from steep early losses.

Prices for natural gas remained higher, meanwhile, which could raise heating bills for the remainder of the winter, after a major supplier of liquefied natural gas to Europe said it would stop production because of the war.

Gold climbed 1.2% as investors looked for safer things to own and as U.S.

officials tried to persuade the world that this war will not last forever.

“This is not Iraq,” U.S.

Defense Secretary Pete Hegseth said Monday.

“This is not endless.” Typically, Treasury yields also fall in the bond market when investors are feeling nervous.

But yields instead climbed, in part because higher oil prices will put upward pressure on inflation, which is already worse than nearly everyone would like.

That could tie the Federal Reserve’s hands and keep it from cutting interest rates.

Lower interest rates can boost the economy and job market, but they also worsen inflation.

Higher rates can do the opposite.

Past military conflicts in the Middle East have not caused long-term drops for markets.

For this war to knock down U.S.

stocks in a significant and sustained way, the price of oil would perhaps need to jump above $100 per barrel, according to strategists at Morgan Stanley led by Michael....