US stocks closed modestly higher on Monday as investors assessed whether a trend will develop in the week following the Federal Reserve’s rate cut.

The gains came amid comments from Fed policymakers and steady factory activity data, building on last week's sharp market rally after the central bank's decision to lower interest rates.

The Fed's pivotal move last week pushed major indexes to monthly gains, defying the historical trend of September as a weak month for equities.

Comments on Monday from three reserve bank presidents were the main focus as investors searched for clues on why the central bank kicked off its easing cycle with an outsized 50 basis-point cut.

Fed officials including Raphael Bostic, Neel Kashkari and Austan Goolsbee supported the central bank's last rate cut and voiced support for more cuts in the rest of the year.

On the data front, US business activity remained steady in September, while average prices for goods and services increased at the fastest pace in six months, potentially signalling a rise in inflation in the months ahead.

“I think investors are still just sort of taking a wait-and-see attitude, if indeed a soft landing is the most likely outcome.” said Sam Stovall, chief investment strategist of CFRA Research in New York.

The Dow Jones Industrial Average rose 0.15 percent, to 42,125, the S&P 500 gained 0.28 percent, to 5,719 and the Nasdaq Composite gained 0.14 percent, to 17,974.

Among rate-sensitive growth stocks, Tesla jumped 4.65 percent, while Meta Platforms rose 0.6 percent after Citigroup lifted its price target on the stock.

Among top movers, Intel rose 3.05 percent after a media report said Apollo offered to make an investment of as much as US$5 billion in the chipmaker. General Motors slipped 1.72 percent after Bernstein downgraded the carmaker's stock to "market perform" from "outperform." (Reuters)