By Joe Wallace

Stocks climbed in early trading Monday as investors awaited a slate of Federal Reserve speakers and data on the manufacturing sector.

The S&P 500 rose about 1.3% and the Nasdaq Composite Index advanced 1.6% after a bruising week for technology stocks. The Dow Jones Industrial Average added 397 points, or 1.3%.

The broad advance came as the yield on 10-year Treasury notes, the benchmark borrowing cost in global debt markets, slipped to 1.43% from 1.459% Friday. Yields fall when bond prices rise.

Stocks, and particularly shares of tech companies, have been buffeted by volatile moves in government-bond markets in recent trading sessions. A lurch higher in yields last week called into question the prospect of a long period of low interest rates, which had underpinned the past year's booming rally in stocks.

Monday's decline in yields helped revive investors' demand for stocks. But money managers remained wary of further spikes that could spark fresh volatility in share prices. Investors are parsing a speech by Fed governor Lael Brainard for clues about whether the central bank will push back against higher yields.

"This week is key," said Andrea Carzana, a fund manager for London-based Columbia Threadneedle Investments. If the Fed doesn't seek to tamp down expectations of higher inflation, yields could continue to rise, rattling the stock market, according to Mr. Carzana.

"I'm expecting turbulence or volatility to remain with us until we have a better understanding of where central banks stand," he said.

Ahead of the bell in New York, Perrigo shares rose 9% after the pharmaceuticals company said it expects earnings and sales to increase in the 2021 fiscal year, and agreed to sell its Generic Rx Pharmaceuticals business to Altaris Capital Partners for roughly $1.55 billion.

United Airlines shares rose more than 4%. The Justice Department said late Friday the airline had agreed to pay more than $49 million to settle criminal charges and civil claims relating to fraud on postal service contracts.

Shares of Johnson & Johnson rose over 2% premarket. The company's Covid-19 vaccine received a green light from the Centers for Disease Control and Prevention Sunday. The U.S. Food and Drug Administration authorized use of the single-dose shot on Saturday.

Fed officials have so far suggested the climb in yields reflects expectations for an economic recovery fueled by the vaccine program and the likelihood of additional fiscal stimulus. President Biden over the weekend urged the Senate to take quick action after the House passed his $1.9 trillion Covid-19 relief package.

Democrats are racing to finish the package before March 14, when certain types of federal unemployment assistance are set to expire.

With the economy already showing signs that it has weathered the third wave of coronavirus and is primed to rebound in 2021, investors are questioning whether another big dose will produce a spike in inflation and further rise in yields.

"The concern on the reflation front boils down to the extent of stimulus, " said Brian O'Reilly, head of market strategy for Mediolanum International Funds. "The market is beginning to rightly question how much is too much."

The New York Fed's John Williams, Cleveland Fed's Loretta Mester and Minneapolis Fed's Neel Kashkari are scheduled to make public appearances on Monday.

The reading from the Institute for Supply Management's February manufacturing index is due out at 10 a.m., and is expected to show another month of robust growth in activity at U.S. factories.

The corporate earnings season is winding down, with Zoom Video Communications and Novavax scheduled to report quarterly results after markets close.

Oil markets resumed their rally ahead of a meeting of the Organization of the Petroleum Exporting Countries and its partners on Thursday. Brent-crude futures, the benchmark in international energy markets, rose 0.8% to $64.94 a barrel, extending their advance this year to 25%.

Analysts expect the cartel, which has held back millions of barrels of crude oil a day since last spring to bolster prices, to agree to boost production in April.

Improving investor sentiment buoyed overseas markets. The Stoxx Europe 600 climbed 1.3%, led higher by shares of travel-and-leisure companies, whose fortunes hinge on the reopening of economic activity.

In Asia, Japan's Nikkei 225 rose 2.4% by the close and China's Shanghai Composite Index added 1.2%.

China's manufacturing activity eased in February, posting the slowest rate of expansion in nine months, according to a private survey of manufacturers. Still, it was the 10th consecutive month in which the Caixin index held above the 50 mark, which separates expansion from contraction.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

March 01, 2021 09:46 ET (14:46 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.