US STOCKS-Wall Street indexes fall as Middle East conflict fans inflation fears
By Caroline Valetkevitch and Johann M Cherian
NEW YORK, March 3 (Reuters) - U.S. stocks were solidly lower on Tuesday afternoon as investors worried a Middle East conflict may persist longer than initially thought.
Most of the major S&P 500 indexes remained lower in afternoon trading, but major indexes were well off their lows of the session.
Investors are worried about the effect of the conflict, now in its fourth day, on inflation as oil prices extended sharp gains. Israeli and U.S. forces hit targets across Iran, prompting Iranian retaliatory strikes around the Gulf as the conflict spread to Lebanon.
“While not much has changed fundamentally since yesterday, investors are growing anxious about the duration of the war and its impact on energy prices," said Joseph Tanious, chief investment strategist at Northern Trust Asset Management in San Diego.
Stocks pared losses after falling more than 2% early in the day, and financials .SPSY were up slightly.
Jed Ellerbroek, portfolio manager at Argent Capital Management, said the "reaction so far is very tame," which suggests investors' tolerance for risk remains somewhat intact.
Airline stocks, which had been lower earlier in the day, were higher, with shares of American Airlines AAL.O up 1.5%.
The Dow Jones Industrial Average .DJI fell 289.77 points, or 0.59%, to 48,615.01, the S&P 500 .SPX lost 51.47 points, or 0.75%, to 6,830.15 and the Nasdaq Composite .IXIC lost 188.62 points, or 0.83%, to 22,560.24.
The Cboe Volatility index .VIX was higher.
Tehran's threat to attack any vessel attempting to transit the Strait of Hormuz, combined with production halts by several Middle Eastern oil and gas producers, has driven up global shipping rates and prices of crude and natural gas. The strait, a critical chokepoint, carries roughly one-fifth of the world's total oil consumption.
While financials were mostly higher, shares of Blackstone BX.N were down 1.2% after its flagship credit fund, BCRED, saw a surge in redemption requests.
Investors feared that the higher oil prices could fuel inflation and complicate central bank policy decisions already strained by tariff-driven price increases.
The U.S. 10-year Treasury yield US10YT=RR earlier touched a one-week high and investors pushed back expectations for a 25-basis-point interest rate cut by the Federal Reserve to September from July, according to LSEG-compiled data.
Declining issues outnumbered advancers by a 3.74-to-1 ratio on the NYSE. There were 117 new highs and 158 new lows on the NYSE.
On the Nasdaq, 1,404 stocks rose and 3,294 fell as declining issues outnumbered advancers by a 2.35-to-1 ratio.
