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U.S. equity moved higher again Monday, lifting the S&P 500 into fresh record territory following its strongest close in two years last week, as investors looked to a busy slate of corporate earnings and economic data to extend Wall Street’s bull-market rally.

Fading inflation prospects, growing consumer confidence and a resilient labor market have challenged traders’ bets on a 2024 recession and clipped the recent rise in Treasury yields, enabling the S&P 500 Friday to set its first record in two years. 

The broadest benchmark of U.S. blue-chip shares, in fact, has risen more than 20% from its early October lows, confirming the current bull market. This came as investors pared bets that the Federal Reserve would hike interest rates and looked to a near-term easing in borrowing costs as economic-growth prospects faded.

However, with the Atlanta Fed’s GDPNow forecasting tool indicating the economy is growing at a 2.4% clip, weekly jobless claims falling to the lowest levels in decades and inflation likely to inch back toward 2% over the coming months, investors are instead placing bets on a so-called economic soft landing while fading wagers on a spring rate cut.

That view was echoed late Friday by San Francisco Fed President Mary Daly, who told an event in San Diego that she and her colleagues would bring down inflation “as gently as we possibly can.”

“We know that policy is in a good place, the economy is in a good place, and we can start to be more patient to see what we need, as a Fed, to do next,” Daly said. “It takes patience. It takes gradualism.”

CME Group’s FedWatch now puts the odds of a March rate cut at around 50%, down from as high as 71% late last year, but it sees the Fed starting its reduction phase in May. 

Benchmark 10-year Treasury note yields, which hit a one-month high on Friday, were last marked 4 basis points (0.04 percentage point) lower at 4.109% heading into the start of the New York trading session.

At the same time, 2-year note yields eased to 4.393% ahead of a $60 billion auction of new paper later today. That’s the first of three coupon sales this week that will raise around $162 billion.

With rate bets neutralized for the moment, investors are likely to focus on this week’s earnings calendar, which includes 61 S&P 500 companies reporting December quarter profits. The group includes Tesla TSLA, Intel INTC, IBM IBM and Texas Instruments TXN.

United Airlines  (UAL) – Get Free Report will report fourth-quarter earnings after the close of trading, with investors looking for a bottom line of $1.70 per share on revenue of $13.54 billion.

Overall, analysts see collective fourth-quarter S&P 500 profits rising around 4.5% from the same period in 2022 to a share-weighted $454.2 billion. That forecast has fallen by around 2.7% since Nov. 1.

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Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is now up 1.47% for the year, are priced for a 16-point opening bell gain.

Futures tied to the Dow Jones Industrial Average, meanwhile, are indicating a 65-point gain while those linked to the tech-focused Nasdaq, which is pacing benchmark gains with a January advance of 2%, suggest a 110-point bump.

In overseas markets, Europe’s Stoxx 600 was marked 0.54% higher in early Frankfurt trading while Britain’s FTSE 100 added 0.17%.

In Asia, Japan’s Nikkei 225 hit a three-decade high after rising 1.62% on the session ahead of tomorrow’s rate decision by the Bank of Japan, which is expected to keep its ultralow-rate policy in place until early spring.