Dow rises as US-Iran talks progress; investors await key inflation data

US stocks opened slightly higher on Monday as investors reacted to signs of progress in the latest round of US-Iran negotiations and looked ahead to a key inflation report that could shape the Federal Reserve's next policy move.

Officials from the United States and Iran made what mediators described as "encouraging progress" during the first round of talks in Switzerland, which concluded early Monday.

The two sides agreed on a roadmap aimed at reaching a final deal within 60 days, although tensions persisted over Lebanon and the Strait of Hormuz.

The Dow Jones Industrial Average rose 204 points. The Nasdaq Composite fell 0.27% while the S&P 500 was up 0.11%.

Oil retreats as diplomatic hopes improve

Oil prices fell sharply after the developments in the US-Iran talks eased some concerns about potential supply disruptions.

Brent crude futures initially gained during early Asian trading before turning lower and falling 1.6% to $79.30 a barrel.

US West Texas Intermediate futures also reversed earlier gains, trading about 0.8% lower at $76 after previously rising as much as 3%.

The easing in oil prices came after mediators Qatar and Pakistan said US and Iranian officials had agreed on a framework for a final agreement within 60 days.

Chip stocks lead gains

Technology shares continued to support broader market sentiment. Memory chipmakers advanced in trading, with Micron Technology and Sandisk gaining about 5% each. Intel rose 4.8%.

Micron's quarterly results, scheduled for release on Wednesday after the market close, are expected to provide the next major test for the technology rally. Shares of the memory chipmaker have surged nearly 300% this year.

Meanwhile, SpaceX shares fell 6% to $173 and were on track for a third consecutive decline following the company's strong market debut.

Another notable mover was Apogee Therapeutics, whose shares jumped 46% after AbbVie announced plans to acquire the biotech company for $10.9 billion in cash. AbbVie shares rose 4.3%.

Inflation data and Fed signals in focus

Investors are now turning their attention to Thursday's release of the personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation.

Economists expect core PCE, which excludes food and energy prices, to increase from April levels.

Following last week's hawkish Federal Reserve meeting, markets have brought forward expectations for another interest rate increase to as early as September, according to LSEG data, while some investors are pricing in a possible move by October.

The yield on the two-year Treasury note, which is sensitive to near-term rate expectations, climbed to 4.230%, its highest level since early 2025.

Investors will also monitor comments from Federal Reserve officials, including New York Fed President John Williams and Chicago Fed President Austan Goolsbee, for further clues on the path of monetary policy.