Oil prices climb on war worries; stocks rise

NEW YORK – Oil prices climbed Monday on worries about violence between Israelis and Palestinians in the Middle East. The stock market was less fearful, though, and flipped from early losses to gains following some potentially encouraging news on interest rates.

Two officials at the Federal Reserve suggested they may not need to raise interest rates again at their next meeting Nov. 1, because a jump in longer-term bond yields may be helping to cool inflation without further market-rattling hikes by the Fed.

That helped stocks erase modest losses from the morning. The S&P 500 had sagged by as much as 0.6% in its first trading after Hamas launched a surprise attack against Israel, which then formally declared war.

The S&P 500 rose 27.16, or 0.6%. The Dow Jones Industrial Average gained 197.07 points, or 0.6%, to 33,604.65, and the Nasdaq composite climbed 52.90, or 0.4%, to 13,484.24. The Russell 2000 index of smaller companies rose 10.44 points, or 0.6% to 1,755.99.

The area under conflict is not home to major oil production, but there are fears that the fighting could spill into the politics around the crude market.

One potential outcome of the violence is a slowdown in Iranian oil exports, which have been growing this year, according to Barclays energy analyst Amarpreet Singh. Less supply of crude would raise its price, all else equal.

The conflict could also hurt the possibility of improving relations between Israel and Saudi Arabia, which is the world’s second-largest producer of oil. Traders may be taking off some bets that Saudi Arabia would raise its oil output to help secure a deal on Israel with the United States, according to Singh.

Oil prices had already been volatile leading into the weekend. A barrel of U.S. crude jumped from less than $70 during the summer to more than $90 last week, raising the pressure on inflation and the overall economy. It pulled back sharply last week before jumping again after the fighting began in Israel.

Monday’s rise in crude helped oil and gas stocks to some of Wall Street’s biggest gains. Marathon Oil rose 6.6%, and Halliburton climbed 6.8%.

Stocks of defense contractors that make weapons were also particularly strong. Northrop Grumman rallied 11.4%, and L3Harris Technologies gained 10%.

On the opposite end were companies that count fuel as among their biggest expenses. United Airlines sank 4.9%, and Carnival fell 4.3%.

Reports this week on inflation at both the consumer and wholesale levels are the next big data points due before the Fed makes its Nov. 1 announcement.

This upcoming week will also bring the unofficial start to earnings reporting season for the S&P 500, with Delta Air Lines, JPMorgan Chase and UnitedHealth Group among the big companies scheduled on the calendar.

Gold for December delivery rose $19.10 to $1,864.30 an ounce. Silver for December delivery rose 20 cents to $21.92 an ounce. December copper rose 2 cents to $3.65 a pound.

The dollar fell to 148.48 Japanese yen from 149.35 yen. The euro fell to $1.0566 from $1.0593.