However, market gains capped as traders look ahead to the Federal Reserve's monetary policy meeting announcement on Wednesday as well as Labor Department's closely watched monthly jobs report.

The Fed's two-day policy meeting would begin on Tuesday. An array of recent U.S. economic data reinforced expectations of rate cuts not happening before September. Traders are awiaitng for the post-meeting statement as well as Chair Jerome Powell's press conference which may give hints about interest rate moves to come.

At closing bell, the Dow Jones Industrial Average index was up 146.43 points, or 0.38%, to 38,386.09. The S&P500 index inclined 16.21 points, or 0.32%, to 5,116.17. The tech-heavy Nasdaq Composite index increased by 55.18 points, or 0.35%, to 15,983.08.

Total 9 of 11 S&P500 sectors closed higher along with S&P500 index. Communication services sector was bottom performer, falling 2.06%, while consumer discretionary sector was top performer, rising 2.03%.

Among individual stocks, Shares of Tesla skyrocketed by 15.3% after the electric vehicle maker said local Chinese authorities removed restrictions on its cars,

Apple shares gained 2.5% following a report that the iPhone maker had renewed discussions with OpenAI about using the startup's generative artificial intelligence (AI) technology.

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