Investors await the August CPI report Wednesday, which could influence Federal Reserve actions.

US stocks traded higher on Monday as investors attempted to rebound from the worst weekly decline of the year.

The S&P 500 dropped more than 4% last week, its worst weekly loss since March 2023, after the August jobs report failed to meet economist estimates.

Looking ahead, investors will be focused on new inflation data, with the consumer price index report for August set to be released Wednesday morning.

Average economist estimates suggest prices rose 2.6% year-over-year last month, a sizable drop from the 2.9% reading seen in July.

According to Capital.com senior market analyst Daniela Hathorn, a light CPI reading could help determine how much the Federal Reserve cuts interest rates at its FOMC meeting next week.

If CPI comes in at 2.6%, it would represent the lowest inflation reading since March 2021, and it would afford the Fed more flexibility to focus more on supporting employment growth than worrying about inflation.

"The disinflation process has stalled in recent months but if forecasts are right, the August drop could see expectations lean closer to a 50 basis point cut throughout this week, possibly giving risk assets another leg higher," Hathorn said in an email to Business Insider.

The CME FedWatch Tool currently expects a 25 basis point rate cut from the Fed next week, with just a 25% chance for a 50 basis point cut.

Investors will also turn their attention to Apple's iPhone 16 launch announcement scheduled for later this afternoon, the Presidential debate between Kamala Harris and Donald Trump on Tuesday evening, and the release of initial jobless claims Thursday morning.