* Indexes up: Nasdaq, S&P 500, Dow rally

* Chip sector outperforms

* Fox drops after $22 billion deal for Roku ( ROKU )

* CBOE Volatility Index falls to over one-week low

(Updates with preliminary closing prices)

By Sinéad Carew and Twesha Dikshit

June 15 (Reuters) - Wall Street's main indexes rallied on

Monday, with the Dow marking a record-high close after the

United States and Iran struck a preliminary agreement to end the

Middle East war and reopen the Strait of Hormuz, leading to an

easing of inflation fears as crude oil prices dropped.

The deal framework - expected to be formally signed in

Switzerland on Friday - did not address key issues such as

Tehran's nuclear program and the Israel-Lebanon conflict.

Still U.S. crude futures settled down 4.9% following the

news and hit their lowest level since March, aiding shares of

energy-sensitive airline and cruise stocks and hurting energy

shares.

Rate-sensitive technology stocks rallied as investors were

more comfortable taking on riskier bets with lower oil prices

easing inflation fears.

"Markets are higher on a classic relief rally. We have a

US-Iran deal that's driving oil sharply lower. This is easing

inflation fears and basically pushing investors back into risk

assets like technology," said Gene Goldman, chief investment

officer at Cetera Investment Management, in El Segundo,

California.

The three main indexes marked their third consecutive

session of gains, recovering after Middle East tensions and a

pullback in AI-related stocks had put Wall Street's record climb

on pause more than a week ago.

According to preliminary data, the S&P 500 gained 123.80

points, or 1.67%, to end at 7,555.26 points, while the Nasdaq

Composite gained 797.79 points, or 3.07%, to 26,686.64.

The Dow Jones Industrial Average rose 490.38 points, or

0.96%, to 51,684.88.

One hope among investors is that a resumption of oil flows

from the Middle East and easing crude prices could give the U.S.

Federal Reserve, which is grappling with inflation, room to hold

interest rates steady instead of raising borrowing costs.

Along with the Iran deal, another big focus for the week is

the U.S. central bank's next policy update, which is due on

Wednesday, after Chair Kevin Warsh's first policy meeting since

he took over from Jerome Powell last month. The meeting follows

May inflation data that showed higher energy costs filtering

into consumer prices.

Traders expect the Federal Reserve to leave interest rates

unchanged this week, but are pricing in a 42% probability for a

25-basis-point hike by the end of the year, according to CME

Group's FedWatch tool.

In individual stocks, SpaceX's shares rallied

sharply for their second day of trading after the Elon Musk-led

firm's blockbuster IPO pushed its valuation above $2 trillion.

Investors had been relieved by its strong market debut on

Friday as they hoped that its landmark Nasdaq launch boded well

for the broader market and for the highly anticipated OpenAI and

Anthropic IPOs expected later this year.

Elsewhere, airlines were among the leading transport sector

gainers with United Airlines rallying. Among cruise

companies, Norwegian Cruise and Carnival Corp ( CCL )

also climbed.

The CBOE Volatility Index, Wall Street's fear gauge,

slipped for its third day in a row after rising to a more than

two-month high the previous week.

The Philadelphia SE Semiconductor index rose sharply with

a big boost from chip giant Nvidia ( NVDA ) and Micron,

which rallied after at least two brokerages sharply raised their

price targets for the stock.

In other movers, shares in Fox tumbled after the

company said it would buy Roku ( ROKU ) in a $22 billion deal.

Roku ( ROKU ) shares also fell.