The Nasdaq climbed 98.31 points or 0.5 percent to 21,978.70, the Dow increased 114.09 points or 0.3 percent to 45,514.95 and the S&P 500 rose 13.65 points or 0.2 percent to 6,495.15.

Wall Street gained on optimism that softer U.S. employment data will prompt the Federal Reserve to cut interest rates later this month. Investors are betting weaker job growth strengthens the case for policy easing. CME Group's FedWatch Tool indicates 88.2 percent chance the Fed will lower rates by a quarter point and a slim 11.8 percent chance of a half-point rate cut.

The Labor Department is scheduled to release reports on producer price inflation and consumer price inflation on Wednesday and Thursday. The annual rate of growth by consumer prices is expected to accelerate to 2.9 percent in August from 2.7 percent in July while the annual rate of growth by core consumer prices, which exclude food and energy prices, is expected to hold at 3.1 percent.

Software stocks turned in some of the market's best performances on the day, driving the Dow Jones U.S. Software Index up by 1.2 percent. An increase by the price of gold also contributed to strength among gold stocks, as reflected by the 1.2 percent gain posted by the NYSE Arca Gold Bugs Index. Networking and retail stocks also saw notable strength while telecom, utilities and natural gas stocks moved to the downside.

Asia-Pacific stocks moved mostly higher. Japan's Nikkei 225 Index shot up by 1.5 percent while China's Shanghai Composite Index climbed by 0.4 percent. The major European markets also moved to the upside on the day. While the German DAX Index and the French CAC 40 Index advanced by 0.9 percent and 0.8 percent, respectively, the U.K.'s FTSE 100 Index inched up by 0.1 percent.

In the bond market, treasuries extended the strong upward move seen over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4 basis points to a five-month closing low of 4.046 percent.

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