Oil Price Drop Sends US Stocks Soaring as Inflation Concerns Ease

The US stock market rallied on Monday as falling oil prices eased concerns about inflation. The S&P 500 index jumped 1.5% and is just 0.1% below its record high set earlier this summer.

The Dow Jones Industrial Average rose by 649 points, or 1.2%, to 2:30 p.m. Eastern time, while the Nasdaq composite was up 2.2%. The price of Brent crude oil dropped 5% to $83.52 after President Donald Trump announced he would hold off on new strikes against Iran at the urging of regional allies.

The easing of tensions in the Middle East helped calm worries about global oil supply and correspondingly led to a decline in Treasury yields. The yield on the 10-year Treasury fell to 4.68% from 4.75% late Friday, although it remains above its pre-war level of 3.97%.

Airlines and companies with high fuel costs, such as United Airlines (up 5.5%) and Norwegian Cruise Line Holdings (up 4.5%), led the market gains. Boeing soared 7.2% after regulators certified its new 737 MAX-7 planes for commercial service.