Stocks extended their recovery from oversold levels as traders ignored a higher-than-expected inflation reading in order to focus on less hawkish remarks from Federal Reserve speakers. After a strong start to the week, oil prices fell.

The S&P 500 rose for the fourth time in a row. Megacaps outperformed, with Nvidia increasing by more than 2%. Exxon Mobil led energy stock losses after agreeing to buy Pioneer Natural Resources. Birkenstock Holding, a German sandal manufacturer, struggled in its US debut. Ten-year Treasury yields fell eight basis points to 4.57%. The dollar has been on a losing streak since March.

Fed Bank of Atlanta President Bostic stated that the central bank does not need to continue tightening unless inflation begins to stall. Meanwhile, Governor Waller stated that the Fed will "watch and see" what happens with rates as financial markets tighten.

According to the most recent Fed minutes, central bank officials agreed last month that US policy should remain restrictive for "some time" to keep inflation under control, while noting that risks had become more balanced.