Stocks rose on Monday as a weaker dollar and growing confidence that inflation has peaked helped Wall Street’s relief rally continue.
The Dow Jones Industrial Average gained 315 points, or nearly 1%. The S&P 500 rose 1.2%, and the Nasdaq Composite added 1.3%.
The moves build on a rebound for U.S. stocks, as all three major averages snapped a three-week losing streak on Friday. The Dow added 2.6% last week, while the S&P 500 gained 3.7%. The Nasdaq Composite added 4.1%.
Stocks have been volatile ahead of the September 20-21 meeting of the Federal Reserve, where the central bank is expected to deliver its third consecutive 0.75 percentage point rate hike in an effort to combat high inflation.
Wall Street investors have been looking for signs that future rate hikes might be smaller as inflation cools off, but Fed Chair Jerome Powell last week reiterated that he is “strongly committed” to bringing down inflation.
The European Central Bank announced its own large rate hike last week, which has helped cool the U.S. dollar’s recent rise.
“We see the relief in equity prices and the recent broad Dollar correction continue into the week, as markets eye short-term peak central bank hawkishness and positioning is relatively defensive,” Citi strategist Ebrahim Rahbari said in a note to clients.
This week, investors are looking ahead to the August consumer price index report, scheduled to be released Tuesday. The report is one of the last pieces of data on inflation the Fed will see ahead of its September meeting. Retail sales and industrial production reports will be released Thursday.