U.S. stocks ended higher on Monday, recovering from sharp losses last week. The S&P 500 gained 0.9%, the Dow Jones Industrial Average added around 245 points, and the Nasdaq surged 1.1%, driven by optimism around inflation data due later this week. Investors are looking to the upcoming consumer and producer inflation reports for insights into inflation trends and clues on the Federal Reserve's next moves regarding interest rates.

Currently, traders are assigning a 75% chance that the Fed will cut borrowing costs by 25 basis points (bps) this month. Meanwhile, the probability of a more aggressive 50 bps rate cut has fallen sharply to 25%, as expectations for monetary easing have softened.

Sector-wise, consumer discretionary, industrials, and technology stocks led the gains, signaling investor confidence in sectors sensitive to economic growth. On the corporate front, megacap stocks performed well, with Microsoft climbing 1.4%, Nvidia surging 3.2%, Amazon rising 1.9%, Meta adding 1.5%, and Alphabet advancing 1.5%.

In contrast, Apple shares dipped 0.4%, as investors await its highly anticipated annual fall product event, where new iPhones and other devices are expected to be unveiled. Despite the slight drop, Apple remains in focus as its product launches often set the tone for tech sector performance in the coming months.

Meanwhile, Boeing shares soared 3.7%, bolstered by news that the company reached a tentative agreement with a union to avoid a potential strike, adding to its strong performance.

As the week progresses, market participants will closely monitor inflation data, which could influence the Federal Reserve's decision on whether to cut interest rates. With expectations largely leaning towards a 25 bps cut, the market remains cautiously optimistic about the Fed's ability to balance economic growth and inflation control.

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