Oil Price Drop Eases Inflation Worries, Supports Stocks

Oil prices fell for the second time in two days, helping to ease concerns about inflation and supporting stock markets. The S&P 500 rose 0.3% on Tuesday, inching closer to its all-time high set earlier this month. The Dow Jones Industrial Average also gained 0.3%, while the Nasdaq composite climbed 0.7%. Brent crude oil prices fell 3.6%, despite tensions between the US and Iran increasing after new sanctions were announced.

The drop in oil prices came as the price for a barrel of Brent crude fell to $87.05, its second decline in two days. This was despite hopes that a deal could be reached between the US and Iran to allow oil tankers to freely exit the Persian Gulf again. A delegation from Pakistan left Iran after talks with Iranian President Masoud Pezeshkian on reopening the Strait of Hormuz.

The fall in oil prices helped temper worries about high inflation, which had driven Treasury yields higher through the summer. The yield on the 10-year Treasury fell to 4.64% from 4.70% late Monday and from 4.74% at the end of last week. This is a significant move for the bond market.

Nvidia and other winners of the boom in artificial-intelligence technology led the way on Wall Street, with Nvidia rising 1.8%. The company will report its latest quarterly results on Wednesday, which could help steer the next move for AI-related stocks.