US stocks rallied at the opening bell on Monday, with the Dow Jones Industrial Average surging more than 600 points, as a sharp decline in crude oil prices lifted investor sentiment following a pause in hostilities between the US and Iran.
Real-time market data showed the Dow Jones Industrial Average rising 587.76 points, or 1.13%, to 52,535.01. The S&P 500 advanced 55.74 points, or 0.75%, to 7,467.72, while the Nasdaq Composite gained 234.80 points, or 0.94%, to 25,210.62.
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The rally followed strong gains in futures trading after crude prices retreated sharply amid signs of easing geopolitical tensions in the Middle East. Brent crude for September delivery fell over 6%, while US West Texas Intermediate crude also declined nearly 6%, reducing concerns over supply disruptions that had rattled markets last week.
Investor optimism, however, remained tempered by fresh geopolitical developments after Ukraine reportedly struck an Iranian commercial vessel in the Caspian Sea. Tehran described the attack as a hostile and criminal act.
Beyond geopolitics, investors are preparing for one of the busiest weeks of the earnings season, with results due from technology heavyweights Amazon, Apple, Meta Platforms and Microsoft. The earnings will be closely watched for commentary on artificial intelligence spending after Alphabet's recent results disappointed investors.
"The biggest risk is the continuation of the spend," Ken Mahoney, CEO of Mahoney Asset Management, told CNBC.
"And then the problem is, if they do listen to shareholders and wind down a little bit of that spend, or reduce the growth of that spend, then the rest of the market is not going to like it."
"So there's like a seesaw factor," he added.
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The US Federal Reserve's policy decision, scheduled for Wednesday, is another major event on investors' radar. While markets broadly expect the next rate hike in September, traders are increasingly pricing in the possibility of a quarter-percentage-point increase as early as this week, according to the CME FedWatch Tool, CNBC reported.
Monday's gains came after Wall Street ended last week in the red. The S&P 500 and Nasdaq posted back-to-back weekly declines, weighed down by weakness in semiconductor stocks and uncertainty surrounding the conflict involving Iran. The Dow also logged its third consecutive weekly loss.
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