Dow jumps 600 points as oil tumbles, earnings week lifts US stocks

US stocks opened higher on Monday as easing concerns over tensions in the Middle East pushed oil prices sharply lower, while investors prepared for a busy week of corporate earnings and key economic data.

The Dow Jones Industrial Average rose 640 points, or about 1.22%, while the S&P 500 gained 0.59%. 

The Nasdaq Composite edged up 0.49%.

The positive start followed President Donald Trump's announcement that he had called off planned strikes against Iran and said talks between the two countries would resume on Monday. 

While Iran disputed the timing of the discussions, hopes of reduced geopolitical tensions weighed heavily on crude prices.

Brent crude dropped 4.9%, while West Texas Intermediate crude fell 6.3%. 

Treasury yields also eased, with the 10-year Treasury yield slipping about 7 basis points to around 4.67%, while the two-year Treasury yield declined roughly 5 basis points as concerns about inflation moderated.

The rally comes after Wall Street endured a volatile July amid concerns over artificial intelligence spending, expectations for further Federal Reserve rate hikes and escalating tensions in the Middle East.

Falling oil prices lift market sentiment

Lower energy prices helped improve investor sentiment after weeks of volatility driven by geopolitical risks.

Markets had been concerned that higher oil prices would keep inflation elevated and complicate the Federal Reserve's policy outlook. 

The decline in crude prices helped ease some of those fears at the start of the week.

Investors also continued to monitor developments at the Federal Reserve. 

Traders are currently pricing in a 62.7% probability of a 25-basis-point rate increase at the September meeting, according to CME FedWatch data.

The week will also bring several important economic reports, including manufacturing activity data and labor market releases. 

The closely watched nonfarm payrolls report due Friday is expected to show the US economy added about 87,500 jobs in July, up from 57,000 in the previous month, while the unemployment rate is forecast to edge up to 4.3% from 4.2%.

Earnings season shifts focus to AI and technology

Following strong quarterly reports from Microsoft and Amazon that eased some investor concerns over returns from artificial intelligence spending, attention is now turning to another wave of technology earnings.

SpaceX is scheduled to report its first quarterly results since its public listing, with investors expected to closely examine AI-related spending and profitability from its Starlink satellite business. 

Shares slipped in trading after remaining below their initial public offering price in recent weeks.

Other companies reporting this week include Palantir, Advanced Micro Devices, SanDisk and Western Digital.

Stocks reflected mixed sentiment across the sector. 

Palantir gained 2.04%, while Microsoft and Salesforce also traded higher. 

AMD declined more than 2%, while SanDisk and Western Digital fell more than 1%, and 5% respectively.

Micron Technology also moved 4% lower after a Reuters report said Chinese memory-chip maker CXMT is considering building a second manufacturing facility in Beijing and is in financing discussions with a government-backed technology hub.

Healthcare deal speculation and global markets

Healthcare stocks were also in focus after reports that Bristol Myers Squibb and AstraZeneca held preliminary merger discussions.

If completed, the transaction could create one of the world's largest pharmaceutical companies, valued at nearly $400 billion.

Bristol Myers shares climbed more than 1% in trading, while AstraZeneca shares declined more than 8%.

Elsewhere, Marriott International fell 5% after issuing a weaker-than-expected third-quarter profit forecast, while Tyson Foods also traded 4% lower after reducing its full-year profit outlook.