Stocks Stage Comeback Rally Following Brutal Week

A sudden burst of optimism drove a clawback rally in U.S. stocks on Monday, following a week that had left one major index in a correction.

The Dow Jones Industrial Average rose more than 511 points, or 1.6%, to almost 32,929. Both the Standard & Poor's 500 Index and the Nasdaq Composite were up 1.2%.

The jump followed last week's 2.1% drop in the Dow, 2.5% decline in the S&P 500, and 2.6% slide in the Nasdaq. That rout left the S&P 500 down more than 10% from its closing high in July, putting it in correction territory until Monday's rally.

Big tech names helped boost the market, with Amazon shares up 3.9% and Meta stock up 2%. But other than sentiments, not much had changed. There were no significant economic reports released on Monday.

“Oftentimes when you get that kind of negativity going into a weekend and nothing new arises that changes the outlook for markets and the economy, you get a bit of a clawback on Monday," Art Hogan, chief market strategist at B. Riley Financial, told CNBC.

Last week's decline was largely driven by a spike in the 10-year Treasury yield, which briefly eclipsed 5% amid renewed concerns that interest rates will have to remain higher for longer to bring down inflation. The 10-year, which serves as a proxy for interest rates on mortgages and other longer-term consumer loans, was yielding 4.88% when the stock market closed Monday.

Investors were looking ahead to developments expected later in the week.

The Federal Reserve's Federal Open Market Committee will meet this week and announce its latest decision on interest rates on Wednesday. The central bank is widely expected to hold rates steady, a net positive for markets.

Apple, the S&P's largest holding, is slated to report earnings on Thursday after the close of the market. It's stock is down 14% from its 52-week high and may be due for a rebound.

On Friday, the Labor Department will release the latest employment numbers, which will give investors more data on the strength of the economy and the pace of inflation.