Optimism over a potential agreement to reopen the Strait of Hormuz lifted U.S. stocks in early trading, with bonds gaining ground and oil prices declining. A batch of strong corporate earnings reports further bolstered sentiment on Wall Street.

As of 9:47 a.m. in New York, the S&P 500 index climbed 0.6%, surpassing its June 2nd peak. The Nasdaq 100 advanced 1.9%, while the Dow Jones Industrial Average rose 0.9%. Market participants are increasingly hopeful that mediators can broker a deal, averting a large-scale U.S. military strike on Iran. This optimism drove Brent crude oil below $80 per barrel.

Palantir Technologies Inc. provided a solid earnings outlook, easing investor concerns about demand for artificial intelligence. Traders are now awaiting results from SpaceX and AMD later today.

"The market is reacting to the potential reopening of the Strait of Hormuz," said Tony Miano of Wells Fargo Investment Institute. "A reopening would help normalize global oil supplies and relieve short-term pressure on energy prices. Falling oil prices also help to ease inflation worries."

As of Monday's close, of the 322 S&P 500 companies that have reported earnings this season, 86% posted earnings per share above analyst estimates, while 10% fell short. On the revenue front, 68% of companies exceeded expectations, compared to 16% that missed. In individual stock moves, shares of Amazon declined after Jeff Bezos filed a plan to sell $4.07 billion worth of stock.