Broad rally ahead of inflation report

Stocks closed higher Monday as Wall Street kicked off a busy week in which central banks are likely to unload the year’s final barrage of interest rate hikes meant to drive down the world’s painfully high inflation.

The Standard & Poor’s 500 rallied 1.4%, trimming its loss for the year to 16.3%. The Dow Jones industrial average rose 1.6% and the Nasdaq composite gained 1.3%. Small-company stocks also rose, pushing the Russell 2000 index 1.2% higher. The indexes are coming off their first weekly loss in three weeks.

The gains were widespread, with more than 90% of stocks in the benchmark S&P 500 index closing higher. Treasury yields rose broadly.

The market rally comes ahead of a key inflation report on Tuesday and a meeting of policymakers at the Federal Reserve, after which investors expect the Fed to announce Wednesday its last rate hike of the year after a blitzkrieg that began in March.

“The inflation data is pretty important because we’ve been getting some decent reads,” said Tom Martin, senior portfolio manager at Globalt Investments. “Not to say that inf lation has been coming down by leaps and bounds, but sort of at the margin it looks as though prices are getting a little bit weaker.”

Other central banks around the world are also likely to raise their own rates by half a percentage point this week, including the European Central Bank and the Bank of England.

Economists at Goldman Sachs expect Fed policymakers on Wednesday to signal their median expectation is for rates to hit a range of 5% to 5.25%, up by half a percentage point from their last projection.

The next milestone for markets comes Tuesday, when the government releases the latest data on inflation at the consumer level. Economists expect to see inflation slowed to 7.3% last month from 7.7% in October.

The yield on the 10-year Treasury, which influences rates for mortgages and other loans, rose to 3.61% from 3.59% late Friday. The two-year yield, which tends to more closely track expectations for the Fed, rose to 4.39% from 4.34%.

Technology stocks accounted for a big share of the market’s gains. Microsoft rose 2.9% and was the biggest single force lifting the S&P 500. The London Stock Exchange Group agreed to a 10-year deal in which it will move data to Microsoft’s cloud and spend at least $2.8 billion. Microsoft is also taking a 4% ownership stake in the company.

Horizon Therapeutics jumped 15.5% after Amgen announced it would acquire the biopharmaceutical company for about $26.4 billion.

Energy producers also rose after the price of U.S. oil settled 3% higher. Exxon Mobil rose 2.5%.

The S&P 500 rose 56.18 points to 3,990.56. The Dow added 528.58 points to close at 34,005.04. The Nasdaq climbed 139.12 points to 11,143.74. The Russell 2000

gained 21.95 points to end at 1,818.61.