(Updates prices throughout to reflect US market close)

* US stocks higher as chipmaker optimism returns

* Oil prices steady as costs return to pre-war levels

* Chipmaker rise comes ahead of critical AI earnings season

By Pete Schroeder

WASHINGTON, July 6 (Reuters) - Wall Street surged on Monday

and oil prices settled around pre-Iran war levels, as investors

eyed new developments in the AI and chipmaker sector ahead of

corporate earnings.

All three major U.S. indexes ended the day higher. The Dow

Jones Industrial Average ended the day up 0.29%, while

the S&P 500 jumped 0.72% and the Nasdaq Composite

climbed 1.12%.

MSCI's gauge of stocks across the globe

rose 0.41%.

The global AI boom continued to dominate markets. South Korean

chipmaker SK Hynix 000660.KS on Monday launched a U.S. share

sale to raise 43 trillion won ($28.07 billion) and drew

indications of interest for up to $7 billion from major

investors. And Broadcom ( AVGO ) announced it had expanded its

partnership with Apple ( AAPL ) to develop and supply custom

chips through 2031.

Elsewhere, Microsoft ( MSFT ) joined the trend of tech layoffs,

announcing it would eliminate around 4,800 jobs, roughly 2.1% of

its global workforce. Investors will be watching closely for how

artificial intelligence-related companies are faring amid some

fears about a bubble in the upcoming earnings season.

Delta Air Lines ( DAL ) and PepsiCo ( PEP ) are the big U.S.

names reporting this week. Samsung Electronics ( SSNLF ) is

set to make a splash on Tuesday as analysts expect an 18-fold

increase in profit.

OIL STEADY

Oil prices were flat on Monday, as prices lingered around

pre-Iran war levels. U.S. crude was steady at $68.69 a

barrel and Brent fell just 0.03% to $72.10 per barrel.

While there were no new developments in the fractious U.S.-Iran

peace talks, ships are passing through the Strait of Hormuz,

with 160 vessels reported transiting from Monday to Saturday of

last week. Meanwhile, Saudi Arabia slashed its official selling

prices, and OPEC+ approved another production target increase

starting in August.

Calming in oil prices looks to be extending some relief to

the private sector, as the decline helped to slow the pace of

increase in services inflation, according to new data from the

Institute for Supply Management. The ISM reported that U.S.

services sector activity dipped in June, but employment

rebounded after contracting for three straight months.

U.S. President Donald Trump will attend a NATO meeting in Turkey

this week, and Fed watchers will get another glimpse into how

new Chairman Kevin Warsh steers the central bank when it

releases Federal Open Market Committee minutes on Wednesday, the

first of his tenure.

Analysts expect Warsh to limit clues as to future interest rate

moves, but Fed Governor Christopher Waller defended forward

guidance in remarks on Monday, saying it can be a "valuable

tool" under the right circumstances.

The yield on benchmark U.S. 10-year notes fell

0.77 basis point to 4.471%, from 4.479% late on Thursday.

In currency markets, the dollar index fell slightly, dipping

0.01% to 100.86, treading water in the wake of Thursday's

weaker-than-expected June U.S. payrolls report. The dollar

firmed 0.44% to 162.08 yen, not far from 40-year peaks

of 162.84, as speculators test Japanese authorities' resolve on

intervention.

In commodity markets, gold was 0.29% lower at $4,163.10 an

ounce, after bouncing 2% last week.