The Dow Jones Industrial Average rose 0.69% to 33,029.18. The S&P 500 (.SPX) gained 0.70% to 4,174.11. The Nasdaq Composite (.IXIC) added about 0.8% to 12,759.00. Those gains echoed the broad Euro STOXX 600 (.STOXX), which gained about 1% on Monday.

The MSCI world equity index added 0.75%, also recovering from losses on Friday. Miners and technology stocks, hit hard in the previous week, led the gains. "The rise in inflation and the Fed's reaction to it has been a real headwind for valuations this year," Morgan Stanley says.

Business investment appears to be an early victim of red-hot U.S. inflation and rising interest rates, according to fresh government data. "Our economists expect the headline (annual) rate to finally dip after energy prices have fallen of late," Deutsche Bank analysts wrote.

Bonds also got a safe-haven bid due to unease over Beijing's sabre rattling against Taiwan. Fed funds futures traders are now pricing for a 69% chance of another 75-basis-point rate increase in September, and for the fed funds rate to rise to 3.65% by March, from 2.33% now.

The U.S. dollar fell 0.4% versus a basket of currencies to 106.23. The euro squeezed out slim gains to reach $1.021. Bitcoin and other cryptocurrencies, which tend to act as a barometer for risk appetite, gained. "Data like this will further any thoughts about 'U.s. exceptionalism' and is very positive for the USD," said Alan Ruskin, global head of G10 FX strategy.
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