Stock market today: Wall Street rises to recoup some of last week's loss as oil prices fall

NEW YORK (AP) U.S. stocks are rising and oil prices are falling Monday on hopes that international efforts to calm escalating tensions in the Middle East may help. The latest report on the US economy, which exceeded expectations, also helped support financial markets.

The S&P 500 was up 0.3% in afternoon trading, recouping some of its loss from last week, which was the worst since October. The Dow Jones Industrial Average was up 163 points, or 0.4%, as of 12:01 p.m. Eastern Time, and the Nasdaq Composite Index was up 0.1%.

Goldman Sachs rose 3.7% and helped financial firms achieve some of the market's biggest gains after reporting higher year-to-date profits than analysts expected. The pressure is on companies as a whole to generate higher profits as the other lever that sets stock prices, interest rates, appears less likely to offer short-term support .

Some nervousness in the stock market eased and the price of benchmark U.S. crude oil fell 1.3% as political leaders around the world urged Israel not to retaliate after Saturday's Iranian attack involving hundreds of drones, ballistic missiles and cruise missiles.

Financial markets were nervous heading into the weekend. The worry was that an Iranian attack could widen the war between Israel and Hamas and ultimately restrict the flow of crude oil. But Israel said 99% of the drones and missiles had been intercepted, as diplomats called for de-escalation and the U.S. administration made clear it did not support a broader war with Iran.

Brent crude, the international standard, fell 1.3% to $89.23 a barrel.

This year's rise in oil prices has sparked concerns about a knock-on effect on inflation, which remains stubbornly high. After cooling markedly last year, inflation has consistently exceeded forecasts every month so far through 2024. This has caused investors to abandon any hope of imminent interest rate cuts. They are planning only one or two reductions overall for this year, according to CME Group data, compared to six or more at the start of this year. Some are preparing not to lower rates.

Not only do rising oil prices threaten to keep inflation and interest rates high, but the U.S. economy is also remarkably resilient. A report released Monday showed that U.S. shoppers increased their spending at retailers last month by much more than economists expected. Such spending, supported by a still-strong job market, has caused many economists to at least delay their forecasts of a possible recession due to high interest rates.

The downside of such strength is that it likely delays the interest rate cut that Wall Street craves because it pushes up the prices of stocks and all kinds of investments, while easing pressure on the economy. But the upside of a strong economy is that it hopefully fuels strong corporate profit growth.

If inflation persists due to dynamics in the economy, that's not necessarily bad for stocks, Bank of America strategists led by Ohsung Kwon wrote in a BofA Global Research report. But it is stagflation that refers to the painful combination of a stagnant economy and high inflation.

M&T Bank jumped 6.2%, one of the biggest gains in the S&P 500, after reporting first-quarter profit that slightly beat analysts' expectations. He also said it slightly reduced the level of pain that would result if the stressed commercial real estate sector took a big hit.

Charles Schwab rose 4.1% after also beating analysts' forecasts for its profit last quarter.

Wells Fargo Investment Institute strategists raised their forecasts for when the S&P 500 index will end this year, in part because the resilience of the U.S. economy has prompted them to revise their forecasts upwards. While they expect the market to be choppy after strong gains since October, they say growth in the U.S. economy should boost business sales.

On the losing side of Wall Street were utility stocks and real estate investment trusts. They pay relatively high dividends and typically come under pressure when bond yields rise because that could turn away income-seeking investors.

Treasury yields rose following the strong U.S. retail sales report. The 10-year Treasury yield rose from 4.52% to 4.64% Friday evening. The two-year yield, which moves more closely with expectations for Federal Reserve action, rose to 4.95% from 4.89%.

American Water Works slipped 0.4% and office owner Boston Properties fell 1.5%.

On foreign stock markets, indices rose in much of Europe. They suffered more in Asia, where Hong Kong's Hang Seng and Tokyo's Nikkei 225 both fell 0.7%.

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AP writers Matt Ott and Zimo Zhong contributed.