Updates after markets open

By Ragini Mathur and Avinash P

July 13 (Reuters) - The S&P 500 and the Nasdaq fell on Monday as a fresh escalation between the U.S. and Iran in the Gulf pushed oil prices higher and unnerved investors, while chip stocks extended their recent declines.

Iran and the U.S. exchanged attacks over the weekend and Tehran said it had closed the Strait of Hormuz, a vital conduit for global energy supplies. The escalation undercuts an interim U.S.-Iran agreement signed last month that aimed to reopen the strait and end the war after 60 days of negotiations.

Crude futures LCOc1 rose more than 3% after investors weighed the renewed threat to the shipping route. The tech-heavy Nasdaq led declines, with semiconductor stocks among the biggest losers.

"The escalating Iran conflict is testing whether the stock market's broad-based growth can hold, and the market will have to balance the positive of corporate earnings strength with the negative of geopolitical risks," said Alex Guiliano, chief investment officer at Resonate Wealth Partners.

Memory-chip makers, which have had a sharp rally this year, extended their recent pullback, with Micron Technology MU.O and Sandisk O> droppi ng 7 .2% and 9 .5%, respectively. They were among the top decliners on the benchmark S&P 500 index.

Four out of 11 sectors on the S&P 500 were trading in the red, with information technology .SPLRCT declining 1.3% to become the top loser.

The Philadelphia SE Semiconductor index .SOX fell 3.6%. The gauge has shed more than 14% so far from its record high hit in late June.

U.S.-listed shares of South Korean chipmaker SK Hynix SKHY.O fell 7% after a blockbuster Nasdaq debut on Friday.

At 9:59 a.m. ET, the Dow Jones Industrial Average .DJI rose 186.23 points, or 0.35%, to 52,831.59, the S&P 500 .SPX lost 12.56 points, or 0.17%, to 7,562.31 and the Nasdaq Composite .IXIC lost 213.76 points, or 0.82%, to 26,067.85.

The blue-chip Dow .DJI fared better, with gains in IBM IBM.N and UnitedHealth UNH.N helping the index stay afloat.

The moves came ahead of a busy week of economic data and corporate earnings that could test the resilience of the U.S. equity rally and the health of corporate America.

The benchmark S&P 500 posted a second straight weekly gain last week, despite volatility in semiconductor shares and renewed U.S.-Iran tensions that put inflation risks back in focus.

Major Wall Street banks will kick off the second-quarter earnings season this week.

S&P 500 earnings are expected to rise 23.7% in the second quarter from a year earlier, according to LSEG I/B/E/S.

"Consumers are showing remarkable resilience and I would expect that bank earnings will probably do fairly well, given the current consumer environment," said Peter Andersen, founder of Andersen Capital Management.

Investors will also parse several key economic reports, starting off with Tuesday's U.S. consumer price index, an inflation reading that could reset expectations for the path of interest rates.

On Tuesday, Fed Chair Kevin Warsh is expected to deliver his first monetary policy testimony before Congress. Fed Governor Christopher Waller is scheduled to speak later on Monday on the economic outlook.

Markets are pricing in at least one 25-basis-point rate hike by year-end, according to LSEG data.

Advancing issues outnumbered decliners by a 1.26-to-1 ratio on the NYSE and by a 1.36-to-1 ratio on the Nasdaq.