Despite supply-chain bottlenecks and inflationary pressures, stocks continued to rise from their lowest levels in almost a year as positive outlooks from retailers boosted confidence in the economy.

Risk appetite was also helped by a drop in US mortgage rates to their lowest level since April 2020 and Broadcom's $61  billion acquisition of VMware.

Macy's boosted its profit expectation amid demand for high-end goods, while deep-discount merchants Dollar tree  and Dollar General raised their sales projections, leading the S&P 500 higher. Apple Inc. and Tesla Inc., both megacaps, contributed to the Nasdaq 100's nearly 3% gain. Southwest Airlines Co. and JetBlue Airways Group Inc. both soared on the back of upbeat revenue forecasts.

After behemoths Walmart and Target lowered their outlooks last week, prompting an industry selloff, the solid projections from retailers brought some relief to investors. According to a survey by the Federal Reserve Bank of New York, US consumers still expect the inflationary shock to be short, and price increases to be mild and stable in the long run.