U.S. stocks rose on Monday after two Federal Reserve officials struck a less hawkish tone on interest rate hikes, quelling some investor fears about a move as early as next week.
Atlanta Fed Bank President Dennis Lockhart said current economic conditions warranted a "serious discussion" on whether to raise rates at the Fed meeting on Sept. 20-21, but later said there was no "urgency" to act at any particular meeting.
Lockhart's Minneapolis counterpart Neel Kashkari echoed those views by suggesting to CNBC that he saw little urgency to take action given the state of the economy.
That helped temper some jitters after recent comments from a host of Fed officials, including Boston Fed President and long-time dove Eric Rosengren, expressed more confidence about raising rates.
Investors are now awaiting Fed Governor and permanent voting member Lael Brainard to speak on monetary policy at 1:15 p.m. ET. Brainard's speech, the last appearance by a Fed official before it enters a quiet period ahead of next week's meeting, will be scrutinized to see if she maintains her dovish stance on rates or takes a more aggressive posture.
"Lockhart helped assuage fears that a rate hike in September was imminent," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
The rising expectations of a September rate hike had sent the three major U.S. stock indexes tumbling on Friday in their worst decline since the Brexit vote.
"Today what you are seeing is a market that is checking to see if the action on Friday was justifiable," said Robert Pavlik, chief market strategist at Boston Private Wealth.
Stock index futures were also sharply lower on Monday. The market also opened lower before reversing course.
At 12:12 a.m. ET (1612 GMT), the Dow Jones Industrial Average was up 65.16 points, or 0.36 percent, at 18,150.61.
The S&P 500 was up 10.97 points, or 0.52 percent, at 2,138.78.
The Nasdaq Composite was up 39.68 points, or 0.77 percent, at 5,165.59.
Wall Street also got a boost from Apple's 1.5 percent rise after having fallen for two straight days. The stock was also chiefly responsible for the S&P 500 technology index to gain 0.73 percent.
Financials fell 0.11 percent, the only decliner among the 10 major S&P 500 sectors, as traders trimmed the chances of a rate hike in September to 21 percent from 24 percent earlier in the day.
A weaker dollar helped oil prices reverse course to trade higher. [O/R]
Perrigo rose 5.7 percent after activist investor Starboard Value disclosed a stake in the drugmaker and said it must make immediate improvements to revive its stock. The stock was the top percentage gainer on the S&P.
Wal-Mart rose percent to $71.03 after Cowen and Company raised its rating to "outperform" from "market perform".
Advancing issues outnumbered decliners on the NYSE by 1,549 to 1,368. On the Nasdaq, 1,508 issues rose and 1,212 fell.
The S&P 500 index showed no new 52-week highs and four new lows, while the Nasdaq recorded 17 new highs and 36 new lows.
(Reporting by Yashaswini Swamynathan in Bengaluru; Additional reporting by Rodrigo Campos; Editing by Savio D'Souza)