The Dow Jones Industrial Average was down 273 points, or 0.6%, as of 11 a.m. Eastern time, and the Nasdaq composite was 0.3% lower.
Oil prices rose again as the world continues the wait to see how Israel will respond to Iran's missile attack from Tuesday. A barrel of Brent crude, the international standard, climbed 3.9% to $76.80 after starting the week below $72.
Iran is a major producer of oil, and a worry is that a broadening war could affect neighboring countries that are also integral to the flow of crude. Helping to keep prices in check, though, are signals that supplies of oil remain ample at the moment.
In the bond market, Treasury yields rose following a pair of reports on the U.S. economy. One showed growth for real estate, health care and other U.S. services businesses accelerated to its strongest pace since February 2023 and topped economists' expectations, though employment trends may be slowing.
A separate report, meanwhile, suggested the number of layoffs across the United States remains relatively low. Slightly more workers filed for unemployment benefits last week, but the number remains low compared with history.
Outside of this week's worries about the Middle East, the dominant question hanging over Wall Street has been whether the job market will continue to hold up after the Federal Reserve earlier kept interest rates at a two-decade high. The Fed wanted to press the brake hard enough on the economy to stamp out high inflation.
Stocks are near their records because of hopes the U.S. economy will indeed continue to grow, now that the Federal Reserve is cutting interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years and indicated more cuts will arrive through next year.
China is also talking about more aid for its economy, and “when the top policymakers in the world’s two largest economies are determined to support economic growth, it pays to listen,” according to Evan Brown, head of multi-asset strategy at UBS Asset Management. He suggests not underestimating policy makers' resolve to cut off the risk of a recession.
The job market could use help, as U.S. hiring has been slowing. The U.S. government will release the latest monthly update on the jobs market on Friday, and economists expect it to show hiring slowed slightly from August's pace.
On Wall Street, Levi Strauss dropped 7.9% despite reporting better profit for the latest quarter than analysts expected. The denim company’s revenue fell short of forecasts, and it said it’s considering what to do with its Dockers brand, whose revenue fell 7% last quarter.
Helping to offset it were gains for Nvidia and other stocks that have been caught up in Wall Street's frenzy around artificial-intelligence technology. Nvidia rose 3.1% and was the strongest force pushing upward on the S&P 500, while Super Micro Computer climbed 2.1% for another one of the larger gains in the index.
The yield on the 10-year Treasury rose to 3.82% from 3.78% late Wednesday. The two-year yield, which moves more closely with expectations for what the Fed will do with overnight rates, rose to 3.68% from 3.64%.
In stock markets abroad, Japan’s Nikkei 225 jumped 2% as its sharp swings continue amid speculation about when the country’s central bank may hike interest rates next.
Hong Kong's Hang Seng has also been swerving, and it gave back 1.5%. Stocks in China have been largely surging on hopes for a flurry of recent announcements from Beijing to prop up the world's second-largest economy. With Shanghai and other markets in China closed for a weeklong holiday, trading has crowded into Hong Kong.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.