Stocks closed higher on Monday following an uneven start to the trading day as investors look ahead to a crucial inflation update and the Federal Reserve's last policy decision of the year.

The Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) each ticked up about 0.4% to close at their highest levels since January 2022 and March 2022, respectively.

Tech stocks also moved higher, reversing earlier losses, with the Nasdaq Composite (^IXIC) adding roughly 0.2% — its highest close since April 2022.

The moves come as investors brace for two events that could set the tone for stocks going into 2024: November's reading on consumer inflation and the Fed's interest rate decision.

Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards

Jobs data on Friday bolstered hopes the Fed could score a "soft landing" for a US economy burdened with historically high borrowing costs. That helped the gauges close out their sixth straight week of wins, with the S&P 500 and Nasdaq ending at their highest levels since early 2022.

Now the focus is shifting to the Consumer Price Index data due Tuesday, which could put that optimism to the test. Signs of cooling in inflation have cemented expectations that the Fed will put a pause on rate hikes this week, while bets are growing for a rate cut before the summer.

In individual corporates, Macy's (M) shares closed nearly 20% higher after getting a $5.8 billion buyout offer. The store chain’s board is considering the bid to take it private, a source told Yahoo Finance.

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