US stocks continued their upward trend on Monday morning, with the Dow Jones Industrial Average climbing nearly 700 points as markets reacted to the latest diplomatic shift from Washington. President Donald Trump stated that planned strikes on Iran have been called off, and peace negotiations are set to resume later Monday afternoon. Oil prices dropped sharply in response.

The Dow rose 678.08 points, or 1.29%, to 53,163.11. The S&P 500 gained 69.90 points, or 0.93%, reaching 7,559.62, while the Nasdaq Composite added 296.343 points, or 1.17%, to 25,670.196.

Crude oil prices fell on Monday after President Trump said on Sunday that he had canceled a planned military strike on Iran, adding that talks between the two nations would restart on Monday. This shift followed reports from Friday that the administration was preparing for further strikes as the prospect of a diplomatic resolution to the conflict dimmed and energy prices surged. Meanwhile, Tehran indicated progress in negotiations with Oman regarding the reopening of the Strait of Hormuz. Oil prices partially recovered earlier losses after an Iranian foreign ministry spokesperson stated that the country is not currently engaged in talks with the US.

At the same time, key OPEC+ members announced plans to increase daily output by approximately 188,000 barrels in September, marking the sixth consecutive month of production increases. This is part of a phased unwinding of the 1.65 million barrels per day voluntary cuts originally agreed upon in 2023.

In early Monday trading, Brent crude fell 5.2% to $83.39 per barrel, while West Texas Intermediate crude futures dropped 6.2% to $79.45 per barrel. US Treasury yields also declined as inflation concerns eased slightly, with the benchmark 10-year note falling 6 basis points to 4.68%. Despite these moves, Vital Knowledge founder Adam Crisafulli noted that investors remain cautious, stating "we've seen this before" and that the conflict could still have a long way to go before a resolution, if one is reached at all.

Chip stocks and mega-cap tech shares were broadly higher. Reports emerged that Bristol-Myers Squibb is in merger talks with AstraZeneca. Palantir Technologies is set to report earnings after the closing bell, followed by SpaceX's first earnings report as a publicly traded company on Tuesday.

Monday marks the first trading day of August, with major indexes seeking stability after a volatile July. Investors are also bracing for a heavy week of labor market data, culminating in Friday's highly anticipated July nonfarm payrolls and unemployment rate report. According to FactSet consensus estimates, the US economy is expected to add 87,500 nonfarm jobs in July, up from 57,000 in the prior month. The unemployment rate is projected to tick slightly higher, rising from 4.2% to 4.3%.