Oil Prices Plummet, Supporting Stocks Amid Ongoing Inflation Fears

Oil prices fell for a second day on Tuesday, easing worries in the bond market and supporting stock prices. The S&P 500 rose 0.3%, edging closer to its all-time high set earlier this month, while the Dow Jones Industrial Average added 160 points.

The drop in oil prices was significant, with Brent crude falling 3.6% to $87.27, a move that came despite tensions between the US and Iran escalating after new sanctions were announced. The price of Brent crude had zigzagged between $72 and $102 last month as hopes rose and fell for a deal allowing oil tankers to exit the Persian Gulf freely.

The decline in oil prices helped calm worries about high inflation, which had driven Treasury yields higher through the summer. Yields on 10-year Treasuries fell to 4.63% from 4.70% late Monday and from 4.74% at the end of last week.

Nvidia was a standout performer on Wall Street, rising 2.2% after its drop of 2.9% was the heaviest weight on the S&P 500. The company will report its latest quarterly results on Wednesday, which could influence AI-related stocks.