Wall Street closed higher on Monday ahead of the publication of the consumer price index for January, a major data point in the Federal Reserve's policy-making process.
Dow Jones concluded the session at 34,245.93, gaining 376.66 points or 1.11 percent. The S&P 500 closed at 4,137.29, rising by 46.83 points or 1.14 percent, while the tech-leaning Nasdaq ended the session at 11,891.79, gaining 173.67 points or 1.48 percent.
CFRA Research chief investment strategist Sam Stovall said investors were "positioning themselves" before the release of January's consumer price index (CPI) data on Tuesday. He explained that most investors predicted a "favorable" CPI report, which could push equity prices up.
"Investors are positioning themselves ahead of what they believe will be a favorable inflation report which could trigger an upward move in equity prices."
Sam Stovall, Chief Investment Strategist at CFRA Research
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According to a Dow Jones report, economists expect headline inflation to rise by 0.4 percent in January. Meanwhile, the core CPI, without the volatile food and energy cost, is expected to increase by 0.3 percent from the previous month. Economists say the annual CPI will be at 6.2 percent, declining from 6.5 percent in December.
Since January 1, the U.S. stock market has performed relatively better than last year as investors predict that declining inflation will result in a policy pivot by the Fed.
However, Cetera Investment Management's investment director Brian Klimke warned that investors should pay attention to other data points due this week — like retail sales and industrial production — to determine the market movement. Klimke predicted that the barrage of data would result in market volatility in the coming days.
Stock markets in other parts of the world also gained on Monday. The pan-European STOXX closed at 462.03, gaining 0.90 percent. Meanwhile, stocks in emerging markets rose slightly by 0.07 percent.
The MSCI All-World index, which tracks stocks across 47 global markets, gained 0.88 percent. Last week, the index saw a 1.3 percent loss despite rising more than eight percent in the first five weeks of this year.
Yields, greenback dip
The benchmark 10-year Treasury yields went down by 3.4 basis points to 3.709 percent on Monday despite reaching its one-month high last week. The 30-year note yields lost 4.1 basis points to 3.7853 percent after hitting 3.826 percent earlier in the day.
The two-year notes, which indicate expectations about the U.S. economic condition, gained 1.1 points to yield 4.5238 percent. Meanwhile, the yield spread between two-year and 10-year notes was last inverted by 81 basis points. The inversion indicated the expectation of a recession in the U.S.
The downward movement in the U.S. bond market also affected the greenback. The U.S. dollar index went down 0.319 percent after gaining slightly in the previous trading session.
The euro was up against the greenback by 0.44 percent to $1.0722, while the sterling traded at 0.65 percent higher to $1.2136.
Despite the decline against most other major currencies, the dollar strengthened against the Japanese yen, which weakened 0.63 percent to trade at 132.27 per dollar.
Japan's central bank is currently undergoing a change in leadership, with former Bank of Japan board member Kazuo Ueda slated to take over the governor position from Haruhiko Kuroda. Although analysts initially predicted that Ueda would put an end to Japan's lax monetary policy, he said the country's current policy was "appropriate."
Global oil prices rebounded from previous losses as investors evaluated concerns about short-term demands and Russia's plan to reduce crude oil production. U.S. crude oil rose by 0.5 percent to $80.14 a barrel, while Brent concluded the trading day by rising 0.25 percent to $86.61.
On the other hand, spot gold fell by 0.6 percent to $1,853.82 an ounce, while the U.S. gold futures slipped 0.66 percent to $1,850.50 an ounce.