US stocks kicked off the first trading day of August with strong gains, shifting focus to a busy week of corporate earnings reports. The S&P 500 climbed 1.5%, edging closer to its all-time high, while the Nasdaq 100 advanced 1.8% and the Philadelphia Semiconductor Index rose 1.1%.

Amazon.com Inc surged another 4.6% on Monday, hitting a fresh record high and becoming the fifth US company in history to surpass the $3 trillion market capitalization mark. A sharp decline in oil prices also boosted market sentiment. After President Donald Trump called off a planned military strike on Iran, both sides signaled willingness to begin negotiations over reopening shipping lanes in the Strait of Hormuz.

US manufacturing activity expanded at its fastest pace in more than four years, providing further support for equities. "Corporate earnings remain the market's primary focus, with about 15% of the S&P 500 by market cap set to report results this week," said Matt Orton, chief market strategist at Raymond James Investment Management.

In after-hours trading, Palantir Technologies Inc reported results and raised its full-year revenue and profit guidance. "This week, the US tech sector will see 95 companies with a market cap above $1 billion release earnings," wrote Jefferies equity trader Jeffrey Favuzza in a note. He added that beyond Palantir, the market will also closely watch ON Semiconductor Corp. Alibaba Group Holding Ltd ADR rose 4.1% after the company launched its largest-ever AI model, claiming it rivals the performance of global leader Anthropic PBC.

At the closing bell, the S&P 500 stood at 7,600.5 points, up 1.5%. The Dow Jones Industrial Average gained 1.3% to 53,178.41 points. The Nasdaq Composite rose 2.1% to 25,913.9 points, while the Nasdaq 100 added 1.8% to 28,776.8 points. The Russell 2000 index climbed 1.7% to 2,981.908 points.