U.S. stocks climbed on Monday, supported by a strong rebound in the technology sector, particularly AI-linked names, alongside rising expectations for a Federal Reserve rate cut at next months meeting.

Fed Governor Christopher Waller said he favors a rate cut in December, though he noted that the January decision may be more challenging due to the backlog of delayed economic data.

His remarks followed comments from New York Fed President John Williams on Friday, who signaled that the central bank may have additional room to ease policy.

Williams said that monetary policy remains moderately restrictive, though less so than before the Feds recent actions, adding that he still sees scope for another adjustment in the near term to bring rates closer to neutral and keep the Fed balanced between its dual mandates.

According to CME FedWatch, markets now assign a 79% probability to a 25-basis-point rate cut in December, up sharply from around 42% a week earlier.

In equities, the Dow Jones Industrial Average rose 0.6% (285 points) to 46,530 as of 16:15 GMT.

The SP 500 gained 1.4% (93 points) to 6,695, while the Nasdaq Composite jumped 2.4% (527 points) to 22,801.