Wall Street starts August strong as Iran deal hopes rise

Wall Street’s main indices have opened higher on the first trading day of August as signs of de-escalating tensions in the Middle East dragged down crude prices while investors prepared for another week packed with earnings and economic data.

US President Donald Trump on Sunday said talks with Iran to reopen the Strait of Hormuz would take place sometime on Monday although Iran contradicted him.

Brent crude prices slid more than 5.5 per cent while the yield on the two-year Treasury note dipped 3.9 basis points.

Most megacap and growth stocks rose in early trading.

Amazon.com gained 4.8 per cent to reach $US3 trillion ($A4.3 trillion) in market value for the first time.

Traders also weighed a potential consolidation in the healthcare sector after a report said Bristol Myers Squibb and AstraZeneca held preliminary merger talks.

A deal could form one of the world’s biggest drug makers, worth nearly $US400 billion.

The US company’s shares inched up 1.5 per cent in early trading.

Seven of the 11 S&P sectors were higher, led by communications services while energy lagged.

Chip stocks were a drag after a rocky July, with the Philadelphia chips index down 2.8 per cent.

Software names, including Salesforce and Microsoft, were on the rise.

Amazon and Microsoft’s earnings last week alleviated some concerns about the lack of evidence of any pay-off from elevated AI spending but investors will be keen on how other major names fare.

“The on-again, off-again nature of US-Iran diplomacy could mean earnings and jobs data will have to do the heavy lifting for the bulls this week,” said Chris Larkin, managing director for trading and investing at E*TRADE from Morgan Stanley.

SpaceX will report on Tuesday its first quarterly results since going public.

Its shares - trading below their $US135 offering price for nearly three weeks - eased 1.4 per cent.

Other AI-linked companies reporting this week include Palantir, Advanced Micro Devices as well as data storage companies SanDisk and Western Digital .

Micron lost 3.4 per cent after Reuters reported that Chinese rival CXMT is considering a second memory-chip plant in Beijing.

In early trading on Monday, the Dow Jones Industrial Average rose 604.70 points, or 1.15 per cent, to 53,089.73, the S&P 500 gained 42.16 points, or 0.56 per cent, to 7,531.88 and the Nasdaq Composite gained 124.05 points, or 0.49 per cent, to 25,497.90.

Wall Street had a rough July due to global concerns on the AI trajectory, future interest rates and the US-Iran conflict.

A report that Federal Reserve chair Kevin Warsh raised the idea of scheduling fewer rate-setting meetings - in line with his plan to reduce Fed rate guidance - added to uncertainties.

New York Fed president John Williams on Monday expressed optimism that inflation pressures are on track to ease gradually.

Hotel operator Marriott International fell 4.2 per cent after forecasting third-quarter profit below expectations while Tyson Foods dropped 3.3 per cent after cutting its annual profit forecast.

The week is also packed with several labour market reports, including the official non-farm payrolls figures due on Friday.

Advancing issues outnumbered decliners by a 1.89-to-1 ratio on the NYSE and by a 1.49-to-1 ratio on the Nasdaq.

The S&P 500 posted 10 new 52-week highs and no new lows while the Nasdaq Composite recorded 62 new highs and 43 new lows.