Stocks pared gains as losses in technology shares tempered optimism with China cutting its quarantine period for travelers and giant Wall Street banks boosting their dividends. Treasury bond yields rose along with the dollar.

Economically sensitive stocks such as financial, energy and industrial ones performed better in the S&P 500. Morgan Stanley boosted bank profits after increasing payouts and announcing a share buyback of up to $20 billion. Airlines, cruise operators and casinos rallied as Beijing's actions increased optimism.

However, it all looks like corrections as part of the big drop:

European stock indices are following the US trend. However, they have not yet updated their lows for the year:

Federal Reserve officials will discuss whether to raise rates by 50 or 75 basis points when they meet next month, with the decision being determined by economic data, New York Fed President John Williams said on Tuesday. While the official expects growth to slow and the unemployment rate to rise, he doesn't project a recession.

Fears of an economic downturn amid restrictive Fed policy have dragged down risk assets this year. Still, analysts continue to be bullish about corporate earnings, with net margin estimates for S&P 500 companies remaining at a record high.

For Goldman Sachs Group Inc. strategists, profit margin forecasts are way too optimistic, putting stocks at risk of more declines when Wall Street analysts downgrade their expectations. Meantime, HSBC Plc's Max Kettner said equities are still under-pricing the impact of a potential recession, with earnings and growth expectations at risk of being revised lower.

Meantime, a key set of rates that the Fed is focusing on to help judge financial conditions is still some way from levels that might prompt officials to halt their tightening plans. Inflation-adjusted US rates at the shorter end of the curve are still mired below zero even as real rates on longer-tenor securities this month surged to levels unseen since 2019.

What to watch this week:

US GDP, WednesdayECB President Christine Lagarde, Federal Reserve Chair Jerome Powell, BOE Governor Andrew Bailey and Cleveland Fed President Loretta Mester due to speak at ECB event, WednesdaySt. Louis Fed President James Bullard speaks, WednesdayChina PMI, ThursdayUS personal income, PCE deflator, initial jobless claims, ThursdayEurozone CPI, FridayUS construction spending, ISM Mufacturing, Friday