Stocks Climb as Oil Falls on U.S.-Iran Talks; Wholesale Inflation Slows

U.S. stock indexes opened higher, with the S&P 500 and Nasdaq leading gains and the Dow Jones Industrial Average also up. Energy shares declined after crude prices slipped, while cyclical and interest-rate sensitive sectors showed early strength.

Oil futures fell after reports that U.S. and Iranian officials engaged in talks that could reduce regional tensions and the risk of disruptions to Gulf oil exports. West Texas Intermediate and Brent crude both moved lower in early trading, pressuring producers and oilfield service companies. The decline reduced a key inflation input monitored by investors and policy makers.

The producer price index rose less than economists had forecast. The month-over-month increase in producer prices was smaller than consensus estimates, indicating cooling input-cost pressures for businesses. Economists noted that softer wholesale inflation can moderate upward pressure on consumer prices over time.

Market participants cited the diplomatic signals and the softer wholesale inflation report as factors supporting the equity gains. Short-dated Treasury yields edged lower on the data, reflecting a modest change in expectations for near-term monetary policy.

Trading showed a rotation away from energy and into banks and industrials; small-cap stocks outperformed during the opening session.

“Easing geopolitical risk coupled with smaller-than-expected wholesale price gains gave investors reason to buy stocks this morning,” a market strategist at a New York investment firm noted.

Investors will watch upcoming consumer price and employment reports and any further developments in U.S.-Iran discussions for market direction.