Oil fell and global stocks rallied as investors priced lower Middle East supply risk and less pressure on inflation.

Markets began the week trading the possibility that one of the year's largest macro risks might be easing.

AP reported that global stocks rallied and oil fell after the United States and Iran reached a tentative deal. The S&P 500 rose 1.5 percent, the Dow gained 638 points, and the Nasdaq climbed 2.3 percent. Brent crude fell 4.8 percent to $83.18 a barrel.

The market logic was direct. Lower oil prices reduce pressure on inflation expectations, corporate margins and household fuel costs. They also give central banks more room to avoid a hawkish response to an energy shock.

The relief spread across risk assets. Airlines, cruise lines and other fuel-sensitive businesses benefited from lower crude, while AI-linked technology names also participated in the rally.

The bond market sent the same message. AP reported that the 10-year Treasury yield eased to 4.45 percent as traders reduced expectations for additional rate pressure tied to energy inflation.

The caveat is that tentative geopolitical deals are not the same as durable supply normalization. Shipping through strategic routes, insurance costs and compliance with any agreement can take time to settle.

For now, the move shows how tightly connected oil, inflation and equities have become. A fall in crude can quickly change the tone of Wall Street when investors believe the shock that drove it is fading.

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