However, market gains capped as investors awaited for Wednesday's likely interest rate hike announcement from the Federal Reserve and press conference from Fed Chair Jerome Powell.

At the close of trade, the Dow Jones Industrial Average index advanced 368.95 points, or 1.09%, to 34,086.04. The S&P500 index was up 58.83 points, or 1.46%, to 4,076.60. The tech-heavy Nasdaq Composite Index increased by 190.74 points, or 1.67%, to 11,584.55.

For the month, the S&P 500 was up 6.2% and the Nasdaq surged 10.7%. The Dow gained nearly 3% in January.

All 11 sectors ended higher along with the S&P500 Index. Materials was top performing sector, adding 2.23% followed by consumer discretionary (up 2.22%), real estate (up 1.88%), and industrial (up 1.71%) sectors.

The Federal Open Market Committee meets on Tuesday and Wednesday, where the Fed is expected to hike rates by 25 basis points (bps) at the conclusion of its two-day policy meeting. Investors will closely monitor comments from Fed Chair Jerome Powell following the announcement for clues on the path of monetary policy.

Wall Street is also eagerly awaiting earnings from four key Nasdaq-listed giants later this week: Facebook owner Meta Platforms, Apple, Amazon, and Google parent Alphabet.

ECONOMIC NEWS: Data from the Labor Department showed employment cost index wages in the U.S. increased by 1% on quarter in the fourth quarter of 2022, after rising 1.3% in the previous quarter.

The S&P/Case-Shiller Home Price Index in the United States decreased 0.8% month-over-month in November of 2022, the same as in October and marking a fifth consecutive decline.

A report from the Institute for Supply Management (ISM) said the Chicago PMI in the United States fell back to 44.3 points in January of 2023 from 44.9 in December. The reading pointed to a fifth consecutive month of contraction in business activity in the Chicago region.

Meanwhile, the Conference Board's consumer confidence index came in with a score of 107.1 in January, after coming in at a revised 109.0 a month earlier.

Among Indian ADR, ICICI Bank inclined 2.92% to $20.83, INFOSYS was up 0.6% at $18.80, WNS Holdings inclined 0.14% to $84.73, HDFC Bank was up 2.06% at $67.36, Azure Power Global sank 1% to $4.06, and Dr Reddy's labs added 0.5% to $53.80. Wipro fell 0.8% to $4.89.

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