U.S. stocks jumped on Monday after investors bought the dip following Wall Street's worst week of the year, betting that a likely Federal Reserve rate cut later this month would bolster a slowing economy. Technology shares, among the hardest-hit stocks last week, were Monday's top performers.

The Dow Jones Industrial Average surged 484.18 points, or 1.2%, to close at 40,829.59. The rebound comes after the 30-stock index lost more than 1,200 points last week. The S&P 500 gained 1.16%, ending at 5,471.05, after posting its worst week since March 2023. The benchmark also broke a four-day losing streak.

The Nasdaq Composite jumped 1.16% to end at 16,884.60, following its worst week in more than two years. Nvidia's 3.5% gain helped lift the tech-heavy index. The artificial intelligence darling lost 14% last week.

Outside of tech, retailers, banks and industrial shares also mounted a comeback as investors believe a rate cut would give a boost to the flagging consumer. JPMorgan Chase, Costco, Amazon and Boeing were among the winners on Monday.

"I do think you have a little short-term bounce here — we were a little bit oversold last week. However, the markets are very focused on how the economy is going to be now, rather than what inflation is going to do and what the economy is going to do," said Sarat Sethi, managing partner at Douglas C. Lane & Associates. "When the uncertainty starts building … first thing you do is take some money off, especially since you've had such a good run this year."

Investors are awaiting two key inflation reports that could further inform the Fed's rate decision on Sept. 18. August's consumer and producer price index reports are slated for release Wednesday and Thursday morning, respectively. Traders see it as a certainty the Fed will cut by at least a quarter point.

Monday's rally comes after the stock market suffered serious losses to kick off its first trading week of September, which is historically a tough month for equities. These declines came as the August jobs report stoked fears of a slowing labor market. The S&P 500 averages a 0.7% decline in September, the worst track record of any month, according to the Stock Trader's Almanac.

Palantir and Dell Technologies popped 14% and 3.8%, respectively, after S&P Dow Jones Indices said late Friday the stocks will join the S&P 500.

Correction: Last week, the S&P 500 posted its worst week since March 2023. An earlier version misstated the year.

Stocks kick the week off on a high note

Stocks rallied on Monday.

The S&P 500 gained 1.16% to settle at 5,471.05, while the Nasdaq Composite added 1.16% to close at 16,884.60. The Dow Jones Industrial Average jumped 484.18 points, or 1.2%, to end at 40,829.59.

— Pia Singh

China weakness hurting luxury outlook, says Barclays

The weakness in China could be structural, according to Barclays. The firm said it has become "incrementally more cautious" on the luxury goods sector as a result of the worse-than-expected Chinese macro backdrop, and downgraded Burberry and Kering to underweight.

"Reality check; it's worse than we thought," analysts Carole Madjo and Wendy Liu wrote in a Monday note. "There is now a clear view than the Chinese weakness is structural and not just cyclical. On Luxury Goods, this translates into negative summer sales in Mainland China (up to c.50% decline) and to clients being more and more selective."

Sales in the third quarter are forecast to fall to significantly negative ranges for most brands, the analysts added. Further downward revisions could be ahead for Kering, they added.

"Sentiment in China remains very poor and most of the feedback suggested that recovery will take time. … Although VIP consumers remain relatively resilient, they are not immune to the slowdown and someone of them have also been feeling pressure," the analysts said.

— Hakyung Kim

U.S. crude oil rebounds more than 1% after worst week since 2023

U.S. crude oil futures rebounded more than 1% on Monday after posting the worst week since October 2023.

The U.S. benchmark, West Texas Intermediate, and the Brent global benchmark have fallen more than 15% in the third quarter.

Morgan Stanley said oil prices appear to be signaling a demand slowdown similar to a mild recession, but said it is too early to make a definitive call. The investment bank's base case is a soft landing with the U.S. economy exiting the year on sound footing.

The investment bank cut its Brent forecast to $75 from $80 previously in the fourth quarter, and sees a surplus of about 1 million barrels per day in 2025.

— Spencer Kimball

Investors should own Nvidia but with size moderation, says Sarat Sethi

It is still OK to own shares of Nvidia at their current price, but investors need to be mindful of their size exposure, according to Sarat Sethi, analyst at Douglas C. Lane & Associates.

"It has done everything we've asked it to do. Now it really needs to have that growth of the next leg and maybe some of the capital that's come out," Sethi said on CNBC's "Power Lunch" on Monday afternoon. He pointed out that shares of the artificial intelligence darling have already come 30% off their peak.

Sethi added that Nvidia's future performance will depend on the success and order demand of its Blackwell chip.

— Lisa Kailai Han

Tech has 'come off the boil,' says Edward Jones' Mahajan

Despite last week's sell-off, the market backdrop remains healthy, Mona Mahajan, Edward Jones senior investment strategist, told CNBC's "Squawk on the Street" on Monday. However, she believes the prior rally leaders such as megacap tech may not continue to see such high gains going ahead.

"Tech has come off the boil," Mahajan said. "Valuations may have gotten extended even though earnings growth is keeping up."

Mahajan forecasts market leadership and valuation expansion as the Federal Reserve lowers rate. Cyclicals and other value parts of the market, which have underperformed, may catch up, she added.

— Hakyung Kim

ResMed shares rise following Apple sleep apnea announcement

Shares of medical device company ResMed ticked higher in afternoon trading after Apple announced that its Apple Watch Series 10 will include a feature that can alert users to signs of sleep apnea. According to Apple, 80% of people who have sleep apnea are undiagnosed.

During the session, ResMed hit a new 52-week high, with its stock price reaching $255.18. Year to date, the stock has soared around 46%.

— Sean Conlon

The U.S. jobs market isn't weak enough for a 50-basis-point cut from the Fed, says Barclays

Wall Street may be hard-pressed to get a 50-basis-point interest rate cut at the Federal Reserve's policy meeting next week, according to Barclays.

"The U.S. jobs market is showing no sign of the rapid deterioration that would call for a 50bp Fed cut this month," analyst Ben McLannahan wrote Monday.

"We still think the Fed will cut by 25bp at the next three meetings, followed by three more quarterly cuts in 2025," he added.

— Brian Evans

Airline stocks outperforming the S&P 500

Airlines stocks were soaring on Monday, outperforming the broader market rally.

In early afternoon trading, the U.S. Global Jets ETF was up 2.6%. Shares of United Airlines jumped 6%, while Delta Air Lines gained 4.5%.

— Jesse Pound

MarineMax pops after Citi says boat dealer is an interest rate cut beneficiary

MarineMax shares jumped more than 3.3% on the heels of a Citi upgrade, with the firm naming the boat dealer a beneficiary of lower interest rates.

Analyst James Hardiman raised his rating to buy from neutral and upped his price target to $44. Hardiman's new target suggests the stock can surge nearly 52% compared to Friday's close.

"At the most basic level, HZO is a strong play on the Fed pivot," Hardiman said, referring to the Federal Reserve. "Boat affordability has been hit hard (maybe hardest) by the higher for longer rate environment and stands to benefit mightily in a soft-landing scenario."

CNBC Pro subscribers can read the full story here.

— Alex Harring

Stocks making the biggest moves midday

Here are the stocks on the move midday:

• Palantir Technologies, Dell Technologies — Palantir and Dell jumped 13% and nearly 5%, respectively, following the announcement after the bell Friday that both stocks would join the S&P 500 before the open on Sept. 23. Palantir is set to take American Airlines' spot, while Dell is going to replace Etsy.
• Summit Therapeutics — The biotech stock surged about 65% after the company announced that its lung cancer drug candidate outperformed Merck's Keytruda in phase three clinical trial. Merck shares dipped 1.5% following the news.
• JetBlue Airways — The airline stock popped 8% after Bank of America analyst Andrew Didora upgraded the firm to neutral from underperform. Didora said JetBlue's "self-help initiatives," such as revenue improvement strategies, are beginning to show early signs of impact. The analyst doubled his price target to $6, which would represent a 13% upside from Friday's close. JetBlue last week hiked its third-quarter revenue estimates.

Read the full list here.

— Sean Conlon

Broad rally propels S&P 500 higher

Every sector in the S&P 500 traded higher on Monday, underscoring the breadth behind the market's rally.

The broad index as a whole climbed 1.2% in afternoon trading. All 11 of the sectors, and more than 450 of the individual members, headed for gains.

Financials, consumer discretionary and industrials led the way, with the three sectors each climbing around 1.8%. On the other hand, communication services saw the most modest gain of the 11 sectors, rising just 0.3%.

— Alex Harring

Small caps can outperform when unemployment rises, RBC says

Small-cap and large-cap stocks have jockeyed back and forth for leadership during the third quarter. But while small caps are seen as more economically sensitive, an outperformance by smaller stocks may not be a good sign for the macro picture, according to RBC Capital Markets.

"In prior cycles, small caps would often start to outperform large caps around the time when unemployment started to rise, as they tended to bake in a challenging economy ahead of time. Since small caps tend to bake in recessions early, and underperform late cycle, the time to buy small caps has typically been in the middle of a recession," Lori Calvasina, the firm's head of global equity strategy research, said in a note to clients.

The small-cap Russell 2000 is up about 2.9% in the third quarter, while the Russell 1000 is little changed.

— Jesse Pound

A U.S. sovereign wealth fund would be a political headache, TD Cowen says

Both President Joe Biden and former President Donald Trump are reportedly eyeing to set up a sovereign wealth fund, an investment vehicle owned by the U.S. government.

Jaret Seiberg, financial services and housing policy analyst at TD Cowen, believes such an investment fund would be a political headache for the administration in charge.

"We do not expect Congress to establish a broad U.S. Sovereign Wealth Fund similar to Saudi Arabia given concerns from both parties that the investments will be politically motivated rather than designed to maximize returns for taxpayers," Seiberg said in a note to clients.

— Yun Li

Best Buy to benefit from potential September rate cut, says Loop Capital

If the Federal Reserve cuts interest rates this month, Best Buy will be a beneficiary, according to Loop Capital.

"We are incrementally more bullish on near-term demand given the beginning of the US Federal Reserve's rate cut campaign next week, which we believe will benefit Best Buy through better housing turnover and higher consumer confidence," analyst Anthony Chukumba wrote in a Monday note to clients.

The firm also reiterated its buy rating on the stock due to the retailer's competitive pricing.

"While Best Buy's price gap with Amazon widened slightly from our last pricing study, we note Best Buy remains at virtual price parity in televisions, home theater, and accessories," he also wrote.

Shares of Best Buy have surged nearly 26% this year.

— Sean Conlon

Stocks open in the green

Stocks opened higher to kick off the trading week.

The S&P 500 added 0.9%, while the Nasdaq Composite gained 1.1%. The Dow Jones Industrial Average rose 187 points, or nearly 0.5%.

— Pia Singh

Deutsche Bank wants to latch on to the affirmative in markets Monday

Deutsche Bank strategist Henry Allen wrote Monday that markets risk overexaggerating "how bad things are" and instead makes the case that economic conditions are uniformly bleak.

The sell-off in stocks "has been driven by a narrow group, and we already knew that September is a seasonally weak month for equities," Allen wrote in a report entitled "Why are markets so nervous right now, and is this justified?"

But on the bright side, he noted, "jobless claims have been falling over the last month, payrolls growth remains positive, and financial conditions are still accommodative by historic standards. Moreover, given the weak track record of leading indicators in this cycle, it's hard to put too much faith in them."

What's more, while speculation has mounted that the Federal Reserve might deliver a half-point reduction at the conclusion of its two-day policy meeting on Sept. 18, "Globally, other central banks have only delivered 25bp moves for the most part, so there doesn't appear to be widespread alarm at the current state of the economy," Allen wrote. "The fact that others like the ECB have only moved in 25bp increments suggests they are not viewing this as a situation that requires a rapid readjustment for now," he said, referring to the European Central Bank.

— Scott Schnipper

Stocks making biggest premarket moves

Here are some of the names making the biggest moves before the bell:

• Boeing — The aircraft maker's stock popped 4% after the company reached a deal with a union that represents its factory workers, potentially avoiding a strike.
• Palantir Technologies, Dell Technologies — Shares of Palantir and Dell jumped 8% and 5%, respectively, after the announcement postmarket Friday that the companies would join the S&P 500 index.
• MarineMax — The stock added 6% after being upgraded to buy from neutral at Citi, which cited the upside of a lower-rate environment and limited downside risks.

To see more stocks making premarket moves, read the full story here.

— Michelle Fox

European markets open higher

European stocks opened higher on Monday, shrugging off more negative sentiment on Wall Street and in Asia-Pacific markets.

The pan-European Stoxx 600 index opened 0.47% higher, with all sectors and major bourses trading in the green. Tech led gains, up 1.43%, while travel and leisure stocks were 1.18% higher.

— Karen Gilchrist

This week's earnings reports

Earnings for this upcoming week will be sparse, with just three companies in the S&P 500 set to report. Here are the major reports to look forward to:

• Oracle (after Monday's closing bell)
• Petco (after Tuesday's closing bell)
• Dave & Buster's (after Tuesday's closing bell)
• GameStop (after Tuesday's closing bell)
• Kroger (before Thursday's opening bell)
• Adobe (after Thursday's closing bell)

— Lisa Kailai Han, Robert Hum

Where the major averages stand

Here is where the major averages stand for the month ahead of Monday's trading:

• The S&P 500 is down 4.25%.
• The Nasdaq Composite is down 2.93%.
• The Dow Jones Industrial Average is down 5.77%.
• The Russell 2000 is down 5.69%.

— Lisa Kailai Han

Stock futures open lower

Stock futures were trading lower Sunday night.

S&P 500 futures slipped 0.1% shortly after 6 p.m. ET. Nasdaq 100 futures lost 0.2%, while futures tied to the Dow Jones Industrial Average fell 59 points, or nearly 0.2%.

— Lisa Kailai Han