Falling oil prices help calm the stock and bond markets

NEW YORK (AP) — Oil prices are falling again on Tuesday, which is helping to ease worries in the bond market and support stock prices.

The S&P 500 rose 0.2% and edged a bit closer to its all-time high set earlier this month. The Dow Jones Industrial Average was up 64 points, or 0.1%, as of 1:36 p.m. Eastern time, and the Nasdaq composite was 0.4% higher.

Some of the strongest action was in the oil market, where the price for a barrel of Brent crude fell 3.8% to $87.14 and was heading for a second decline following 13 gains in 14 days. The drop came even though tensions between the United States and Iran seemed to ratchet higher after the Trump administration announced new sanctions to further hurt Iran’s economy.

Brent’s price zigzagged between $72 and $102 last month as hopes rose and fell that the United States and Iran could reach a deal that would allow oil tankers to freely exit the Persian Gulf again.

A delegation from Pakistan left Iran Tuesday after talks with Iran’s president and other senior officials on reopening the Strait of Hormuz and reviving negotiations to end the Iran-U.S. conflict, the Pakistani military said. Pakistan Interior Minister Mohsin Naqvi said a meeting with Iranian President Masoud Pezeshkian had been “very positive and productive.”

Tuesday's drop in oil prices tempered the worries about high inflation that helped drive Treasury yields in the bond market higher through the summer. Yields had gotten so high that the U.S. Treasury Department announced a surprise move last week to increase its repurchases of longer-term Treasury notes and bonds.

High yields make borrowing more expensive for everyone and can slow the economy’s growth while undercutting prices for stocks, cryptocurrencies and other investments.