By Mark DeCambre and Barbara Kollmeyer, MarketWatch

Dollar surges against yen

U.S. stocks kicked off trade higher on Monday, advancing after Federal Reserve Chairwoman Janet Yellen last week revived expectations that the central bank could raise interest rates by the end of 2016.

The Dow Jones Industrial Average gained 75 points, or 0.4%, at 18,470, led by rises in IBM Corp(IBM). Shares of Apple Inc.(AAPL) led blue-chip losers. The S&P 500 rose 8 points, or 0.4%, at 2,177. Only the energy sector, down 0.2%, traded in the red among the large-cap benchmark's 10 sectors. Utilities and telecom shares led gainers.

Meanwhile, the Nasdaq Composite Index added 15 points, or 0.3%, to trade at 5,234.

Data from the key cog of the U.S. economy--consumers--delivered a small dose of optimism for buying sentiment. Americans increased spending by 0.3% in July, buying more new cars and trucks. Consumer spending has proved stable even as businesses investment has been weak.

Meanwhile, a closely watched measure of inflation increased, with the so-called PCE index, the Fed's preferred gauge, showed consumer prices climbed closer to the central bank's 2% target in July.

Equities have struggled across the globe on the view U.S. rates may rise in the near term and make the cost of borrowing more expensive, potentially slowing corporate expansion. Japanese stocks, however, bucked the downbeat trend as the yen tumbled against the dollar on the fresh Fed thinking (http://www.marketwatch.com/story/dollar-rockets-to-two-week-high-versus-yen-as-fed-officials-signal-rate-hikes-2016-08-29). The yen moved triggered a 2.3% rally for the Nikkei 225 index (http://www.marketwatch.com/story/european-stocks-slump-as-yellens-rate-hike-message-sinks-in-2016-08-29). In Jackson Hole, Wyo., on Friday, Yellen noted signs of improvement in the U.S. economy and hinted a rate increase is in the cards in coming months.

Those comments pushed the Dow industrials and the S&P 500 lower on Friday (http://www.marketwatch.com/story/worries-about-yellens-jackson-hole-speech-stop-dow-futures-in-their-tracks-2016-08-26), though the Nasdaq finished higher. Investors also paid close attention to a CNBC interview that same day with Fed Vice Chairman Stanley Fischer (http://www.marketwatch.com/story/feds-fischer-yellens-speech-consistent-with-possibility-of-2-interest-rate-hikes-this-year-2016-08-26) who said Yellen's speech was "consistent" with possibly two rate hikes this year.

Read:For now, negative rates are off the table for Fed (http://www.marketwatch.com/story/for-now-negative-rates-are-off-the-table-for-fed-2016-08-28)

Mixed Fed messages? Focus will now turn to this Friday's nonfarm-payroll data for August. "Following two months of stellar jobs gains in June and July, we believe that another solid report could amplify further the case for a move this year, perhaps as early as at the next gathering," said Charalambos Pissouros, senior analyst at IronFX Global, in a note to investors.

Economic preview: U.S. job creation sticks to fast lane even as economy drops below speed limit (http://www.marketwatch.com/story/us-job-creation-sticks-to-fast-lane-even-as-economy-drops-below-speed-limit-2016-08-28)

The market is currently pricing in a 30% probability for a rate increase at the September Fed meeting and an almost 44% chance for it happening in December, according to the CME Group FedWatch tool. (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html)

(http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html)But some accused the Fed of sending mixed signals. "I still think one needs a Bletchley Park code book to decipher the Fed's policy. I know I am not the brightest pin in the box, but I am all over the place with Fed talk," said David Buik, market commentator at Panmure Gordon & Co, in a note to clients.

Stocks to watch:Caesars Entertainment Corp.(CZR), the parent company of the bankrupt Caesars Entertainment Operating Co., cannot shield itself (http://www.marketwatch.com/story/caesars-shares-fall-after-judge-blocks-shield-from-bondholder-suits-2016-08-2)from about $11 billion in claims from bondholders, a judge said Friday, according to Reuters. Shares tanked 20% on Monday.

Shares of Mylan NV(MYL) climbed 0.7% ahead of the bell as the drugmaker said it would launch a cheaper, generic alternative to EpiPen (http://www.marketwatch.com/story/mylan-to-launch-cheaper-generic-epipen-alternative-2016-08-29-61035653) after running into stark criticism for dramatically raising the price of the lifesaving drug.

Other markets: Gold prices drifted south on Monday, picking up from last week's losses, as the dollar gained. While prospects for higher rates can boost the dollar, they depress the value of precious metals that are priced in the currency.

Crude-oil prices slumped 1.5% (http://www.marketwatch.com/story/oil-prices-pull-back-as-investors-lock-in-profits-2016-08-29), also pressured by the stronger dollar.

--Sara Sjolin contributed to this article

(END) Dow Jones Newswires

August 29, 2016 10:19 ET (14:19 GMT)