U.S. stocks advanced on Monday as traders increased bets that the Federal Reserve could begin cutting interest rates later this year. The move came ahead of fresh inflation data due this week, which could help shape expectations for the central bank’s next steps.

Major indexes moved higher in afternoon trading as investors looked past recent uncertainty and focused instead on the possibility of easier monetary policy. Lower rates would typically support borrowing, business investment, and equity valuations, giving markets a reason to push higher.

The rally reflects a market that is increasingly sensitive to any sign that inflation is cooling enough for policymakers to loosen policy. Still, the coming data releases may quickly change that outlook if price pressures prove stickier than expected.

For now, Wall Street is leaning into a cautiously optimistic view, with traders positioning for a scenario in which the Federal Reserve gains room to reduce rates later in the year.