US stock markets rallied on Monday, extending their winning streak as investors awaited crucial inflation data that could provide clues about the duration and severity of the Federal Reserve's tightening policy.

Energy and technology shares helped the three major US stock indexes touch two-week highs and notch their fourth straight session of gains, in which growth was slightly favoured over value.

The S&P 500 gained 1.1 percent to end at 4,110, while the Nasdaq Composite gained 1.3 percent to 12,266. The Dow Jones Industrial Average rose 0.7 percent to 32,381.

The Labor Department's consumer price index (CPI), expected before Tuesday's opening bell, is this week's main event, and will be scrutinized for any signs regarding the number and size of future interest rate hikes from the Fed.

"CPI is expected to see a little bit of a decrease," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "The market is hoping that news translates into smaller rate hikes after the Sept FOMC meeting."

"Because of that, you're seeing a risk-on type of mentality today," Pavlik added.

On Thursday, Fed Chair Jerome Powell affirmed the central bank remains "strongly committed" to tackling decades-high inflation, and that they would "keep at it until the job is done."

Economists polled by Reuters expect monthly CPI to have contracted 0.1 percent in August from July, edging down to 8.1 percent year-on-year, mainly due to the recent cool-down of commodity prices.

Financial markets have currently priced in a 92 percent probability that the Federal Open Markets Committee (FOMC) will implement its third straight 75-basis-point interest rate hike at the conclusion of next week's policy meeting, according to CME's FedWatch tool.

"The market has now fully priced in 75 basis points for September," Pavlik said. "The market is hoping the next one is 50 basis points and that we'll see a slight decrease in rate hikes after that, and Wall Street can live with that."

The S&P 500 gained 1.0 percent to end at 4,109, while the Nasdaq Composite gained 1.3 percent to 12,266. The Dow Jones Industrial Average rose 0.7 percent to 32,381.

Economically sensitive transports outperformed the broader market, while market-leading megacaps provided the most lift.

A jump in Apple shares, beaten up this year, came days after the gadget maker unveiled updates to its iPhone and Apple Watch.

Drugmaker Bristol-Myers Squibb surged following the Food and Drug Administration's approval of its psoriasis drug late on Friday.

Rival Amgen, maker of psoriasis drug Otezla, dropped.

Twitter slipped amid its legal wrangling against Tesla chief Elon Musk for scrapping a deal to acquire the social media platform.

KFC and Pizza hut operator Yum Brands Inc advanced in the wake of its US$2 billion share buyback announcement. (Reuters)