S&P 500 falls to start the week after Hamas attack against Israel: Live updates

The S&P 500 declined Monday as the deadly Israel-Hamas conflict pressured an already fragile market dealing with inflation and surging interest rates.

The Dow Jones industrial Average hovered around flat, while the S&P 500 slid 0.4%, and the Nasdaq Composite lost about 1%.

The Israeli-Palestinian conflict escalated Saturday after militant group Hamas staged an invasion, to which Israel was seemingly caught off guard. More than 700 Israelis have been killed in what Hamas is calling Operation Al Aqsa Flood, with at least 490 Palestinians killed in retaliatory Israeli strikes on the Gaza Strip. The attack led Israeli Prime Minister Benjamin Netanyahu to declare his country is at war.

Hamas is a designated terrorist group backed by Iran that has governed the Gaza Strip since 2007.

The rising geopolitical tensions caused by the conflict could have ramifications for the energy market, with some experts forecasting a “knee jerk surge” in oil. The rising tension could also serve to stoke further volatility in market that has kept traders worried with persistent inflation and higher interest rates.

WTI crude oil futures were up by 3.5% on Monday, trading above $85 per ounce. International Brent futures rose 3.2% to $87.29.

Major defense and oil companies jumped amid the attack, with Lockheed Martin and Northrop Grumman Corp adding 7.9% and 9%, respectively. Marathon Oil and Occidental Petroleum, meanwhile, climbed 4.3% and 3.2%, respectively.

Oil prices meaningfully pulled back below $90 per barrel last week, with Brent crude slipping roughly 11% and  U.S. West Texas Intermediate notching an 8% drop. While neither Israel nor Palestine are major players in the global energy picture, both nations are located in a key region for oil that could have broader implications.

OPEC+, the oil cartel that includes non-OPEC member Russia, will remain cautious on any moves to expand oil output further and change plans for cuts, the Saudi Arabia’s energy minister Prince Abdulaziz bin Salman told CNBC on Sunday.

With the bond market closed on Monday for Columbus Day, Wall Street will have to wait until Tuesday for an update on interest rates.