The major averages on the Wall Street all moved sharply higher over the course of the session on Monday. The Dow surged 484.18 points or 1.2 percent to 40,829.59, the Nasdaq jumped 193.77 points or 1.2 percent to 16,884.60 and the S&P 500 shot up 62.63 points or 1.2 percent to 5,471.05. Optimism the Federal Reserve will lower interest rates later this month has contributed to the strength on Wall Street despite lingering concerns about the outlook for the U.S. economy.

Sectors such as consumer discretionary, industrials and financial stocks led the recovery as well as tech shares which were among the hardest hit during last week's selloff. Investors have now shifted their focus to upcoming inflation data, which will provide crucial clues on the Fed's policy decision later this month.

The yield on the US 10-year Treasury note held its recent decline to around 3.71% on Tuesday as investors braced for a key US inflation reading this week that could influence the magnitude of an expected interest rate cut from the Federal Reserve this month. August's consumer price index will be released on Wednesday, followed by the producer price index on Thursday. The dollar index rose to around 101.7 on Tuesday.

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