US stock indexes rallied sharply on Monday as investors grew increasingly optimistic that the United States and Iran are nearing an agreement to end the conflict and reopen the Strait of Hormuz, sending oil prices to their lowest levels since March and boosting demand for risk assets.

The Dow Jones Industrial Average surged by about 600 points to reach a new intraday record high, while the SP 500 gained 1.6% and the Nasdaq Composite jumped more than 2.5%, led by technology and semiconductor stocks.

The gains followed US President Donald Trump's announcement that Washington and Tehran had reached a framework agreement, with a formal memorandum of understanding expected to be signed in Switzerland on Friday through Pakistani mediation. The agreement includes reopening the Strait of Hormuz and restoring maritime traffic, contributing to a roughly 5% decline in oil prices.

Brent crude futures fell to around $82.90 per barrel, while US West Texas Intermediate crude dropped to near $80 per barrel amid expectations of a gradual recovery in regional oil supplies.

Airline, travel, and leisure stocks benefited from lower energy costs. Shares of United Airlines, Delta Air Lines, and American Airlines advanced alongside cruise operators.

By contrast, energy stocks came under pressure, with shares of Exxon Mobil and Chevron falling about 5%.

Meanwhile, SpaceX extended its gains in its second day of trading following its historic IPO, rising another 6% after surging 19% in its debut session and lifting its market capitalization above $2 trillion.

Semiconductor stocks also supported the broader market rally. Shares of Micron Technology jumped 9% after several financial institutions raised their price targets, while NVIDIA, Intel, and Marvell Technology posted gains, pushing the Philadelphia Semiconductor Index more than 4% higher.

Analysts believe the decline in oil prices could provide the Federal Reserve with greater flexibility in addressing inflation, particularly as investors prepare for this week's policy meeting, the first chaired by Kevin Warsh.

In currency markets, the US dollar remained near its lowest level in ten days, while expectations of easing inflationary pressures strengthened investor appetite for risk-sensitive assets, including equities and cryptocurrencies.

The metals market also reacted to the geopolitical developments. Aluminum prices in London fell to a two-month low amid expectations that metal shipments through the Strait of Hormuzwhich accounts for roughly 9% of global aluminum productionwill gradually resume.