U.S. stocks opened higher to start the month as investors cheered strong earnings growth.

The Dow Jones Industrial Average climbed 181 points, or 0.5%, shortly after the opening bell. The S&P 500 also added 0.5% and the Nasdaq Composite rose 0.3%.

Investors are upbeat that the economic expansion will boost corporate profits and enable stocks to keep rising, albeit at a slower pace. Some are cautious that the highly contagious Delta strain of coronavirus, a prolonged spell of inflation and China’s efforts to rein in tech firms could lead to bouts of volatility.

“There are a few good reasons why the economy will continue to grow at above normal rates,” said Edward Smith, co-chief investment officer at U.K. investment firm Rathbone Investment Management. Consumers are spending freely, companies plan to invest in their businesses and firms are restocking inventories, he said.

“That should enable earnings momentum to stay strong, carrying through to the end of the year,” Mr. Smith said.

Among individual stocks, Square rose 7%. The payments company agreed to buy Australia’s Afterpay—which allows users to pay for goods in interest-free installments—in an all-stock deal valued at around $29 billion.

Investors are upbeat that the economic expansion will boost corporate profits and enable stocks to keep rising.

Investors are upbeat that the economic expansion will boost corporate profits and enable stocks to keep rising.

Photo: justin lane/Shutterstock

U.K. engineering firm Meggitt, which specializes in the aerospace, defense and energy industries, shot up around 55% in London after agreeing to a £6.3 billion takeover, equivalent to around $8.8 billion, by Parker Hannifin. Shares in Parker Hannifin added 1.4% in U.S. trading.

Investors said sentiment in broader markets was given a boost by comments from the Chinese securities regulator. The China Securities Regulatory Commission said it would cooperate with Washington on U.S. listings, after the Securities and Exchange Commission said it would increase scrutiny of Chinese companies that aim to sell shares in the U.S.

“Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S.,” a spokesperson for the CSRC told reporters, according to a transcript posted on the regulator’s website Sunday.

The comments appear to have buoyed Asian markets after a turbulent few weeks. China’s Shanghai Composite Index advanced almost 2% by the close of trading, while Japan’s Nikkei 225 climbed 1.8% and Hong Kong’s Hang Seng rose 1.1%.

Progress toward the passage of an infrastructure spending package in Washington also lifted global markets, said Lars Skovgaard Andersen, investment strategist at Danske Bank Wealth Management. Senators wrapped up the construction of a roughly $1 trillion infrastructure bill Sunday, racing to pass it through the chamber by the end of the week and send it to the House.

In the bond market, the yield on 10-year Treasury notes fell to 1.206% from 1.239% Friday. Bond yields and prices move in opposite directions.

Oil prices came under pressure after data signaling a slowdown in Chinese manufacturing activity. The private indicator suggested activity fell to a post-Covid-19 low in July as heavy floods, a resurgence in Covid cases and power shortages knocked output and new orders.

Futures on Brent crude, the benchmark in international energy markets, fell 0.7% to $74.83 a barrel.

The Stoxx Europe 600 rose 0.5%, led by shares of retailers and basic-resource companies.

Among individual stocks, Allianz dropped almost 7% after the German insurer said earnings could be hit by investigations into its Structured Alpha funds, which have been linked to investor losses during the early-2020 market downturn.

Write to Joe Wallace at Joe.Wallace@wsj.com