The major U.S. stock indices are falling in early trading, with stocks down today due to the outbreak of war between Israel and Hamas. Israel declared war against Hamas after the organization launched many attacks against Israeli soldiers and civilians over the weekend, killing “at least 700 Israelis,” wounding more than 2,200, and taking more than 130 hostages. Israel has responded by initiating massive bombing campaigns against the Gaza Strip, which is ruled by Hamas. More than 400 Palestinians have been killed in the airstrikes.

The S&P 500 is down 0.5%, while the Dow Jones Industrial Average is also falling 0.5% and the Nasdaq is sinking 0.65%.

Investors Are Worried About a Wider War

On Wall Street today, there are fears “that key crude-producing countries” in the Middle East could enter the conflict. As a result, oil prices are climbing about 4% today.

Higher oil prices undermine the American economy by weakening consumers’ spending power. Consumer spending generates about 70% of the American economy.

Additionally, higher oil prices significantly raises inflation and could ultimately cause the Federal Reserve to keep interest rates “higher for longer.” Elevated interest rates harm companies’ ability to expand and undermine consumers’ spending power while making stocks less attractive relative to bonds.

Some Stocks Are Advancing

Although the war is dragging most stocks down today, a small number of stocks are advancing this morning, with defense stocks Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) climbing 5% and 3.25%, respectively. Also climbing are some major oil companies, with Exxon Mobil (NYSE:XOM) rising 2.6%, Chevron (NYSE:CVX) adding 3%, and BP (NYSE:BP) gaining 2.4%.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.