NEW YORK (AP) — U.S. stocks fell sharply following a mixed start to earnings reporting season. The S&P 500 sank 1.5% Friday. The Dow dropped 1.2%, and the Nasdaq composite fell 1.6% from its record. Worries about tensions in the Middle East rattled financial markets, and Treasury yields fell as investors looked for safer places for their money. JPMorgan Chase was among the stock market’s heaviest weights after giving a forecast for a key source of income that was below analysts’ estimates. The pressure is always on companies to produce fatter profits. But it’s particularly acute now given expectations that interest rates may stay high for a while.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are falling sharply Friday following a mixed start to earnings reporting season. Worries about potentially escalating tensions in the Middle East also rattled financial markets, pushing investors to look for safer places for their money.

The S&P 500 was 1.6% lower in afternoon trading and heading for its worst weekly loss since October, when a huge rally on Wall Street began. The Dow Jones Industrial Average was down 530 points, or 1.4%, with a little more than an hour remaining in trading, and the Nasdaq composite dropped 1.8% from its record set the day before.

JPMorgan Chase was one of the heaviest weights on the market and sank 5.7% despite reporting stronger profit for the first three months of the year than analysts expected. The nation’s largest bank gave a forecast for a key source of income this year that fell below Wall Street’s estimate, calling for only modest growth.

The pressure is always on companies to produce fatter profits. But it’s particularly acute now given worries that the other main lever that sets stock prices, interest rates, may not offer much lift in the near term.

A stream of reports this year has shown both inflation and the overall economy remain hotter than expected. That's forced traders to sharply scale back forecasts for how many times the Federal Reserve may cut its main interest rate this year. Traders are largely betting on just two cuts, according to data from CME Group, down from forecasts for at least six at the start of the year.

Stock prices had already run to records in part on expectations for such cuts. Without easier interest rates, companies will need to produce bigger profits to justify their stock prices, which critics say are already too expensive by various measures.

This year’s jump in oil prices has further raised worries, because it could add more pressure on inflation. They rose again Friday as tensions continue to roil the Middle East. Israel has said it could strike Iran if it launched an attack from its territory following the killings of Iranian generals in a blast at the Iranian consulate in Syria.

Brent crude, the international standard, rose 0.8% to settle at $90.45 per barrel. It briefly topped $92 during the day and is roughly back to where it was in October.

At the same time, Treasury yields in the bond market sank and the price of gold rose, which is typical when investors are herding into investments seen as safer.

The yield on the 10-year Treasury fell to 4.50% from 4.58% late Thursday. Gold, which has been setting records, got near $2,450 per ounce for before paring its gain.

Adding to the nervousness was a preliminary report suggesting sentiment among U.S. consumers is sinking. It's an important update because spending by U.S. consumers is the main engine of the economy.

Perhaps more worrisome was that U.S. consumers are getting more pessimistic about inflation. Their forecasts for inflation in the coming 12 months hit the highest level since December. Such expectations could ignite a self-fulfilling prophecy, where purchases meant to get ahead of higher prices only inflame inflation more.

That's why so much scrutiny is on corporate profits. While the downside of a remarkably resilient U.S. economy is a diminished chance of cuts to rates, the upside is that it should help prop up sales and earnings for businesses.

That's helped growth in profits to broaden out to more kinds of companies, rather than just the Big Tech behemoths that dominated the market last year, according to David Lefkowitz, head of U.S. equities at UBS Global Wealth Management.

Because of that, he's forecasting the S&P 500 could end the year around the 5,200 level, roughly where it closed Thursday. He says the index could maybe even rise to 5,500 if inflation pressures ease more quickly or corporate profit growth is stronger than expected.

On Wall Street, Wells Fargo slipped 0.7% after swinging between gains and losses. It beat analysts' profit targets for the latest quarter in its first report since the Biden administration eased some of the restrictions on the bank after a series of scandals. But its net interest income, a key component of bank profits, came up shy of forecasts.

Citigroup fell 2.1% despite also reporting stronger-than-expected results, while State Street rose 0.6%.

Banks are leading off a reporting season where analysts are forecasting companies in the S&P 500 to deliver a third straight quarter of growth, according to FactSet.

This upcoming week will feature reports from such big names as Bank of America, Johnson & Johnson and UnitedHealth Group.

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AP Writers Matt Ott and Zimo Zhong contributed.

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