Stocks rose sharply on Monday as Treasury yields rebounded, quelling fears of a possible recession. Equities also got a boost after the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei.

The Dow Jones Industrial Average closed 249.78 points higher, or 1%, at 26,135.79. The S&P 500 gained 1.2% to close at 2,923.65 as the energy and tech sectors outperformed. The Nasdaq Composite advanced 1.4% to end the day at 8,002.81.

These gains add to a rebound that started last week after the Dow posted its worst session of 2019. The 30-stock index plummeted 800 points, or 3.1% on Wednesday before regaining some of the lost ground on Thursday and Friday. The S&P 500 is still down 1.9% in August and off more than 3% from a recent record.

The benchmark 10-year Treasury yields rose to about 1.6% from around 1.54%. Bank shares rose along with yields. Bank of America closed 0.9% higher along with J.P. Morgan Chase. Citigroup climbed 1.3%.

"We're seeing more stabilization, and it's really off the back of more stimulus in the air," said Gregory Faranello, head of U.S. rates at AmeriVet Securities. "We're just taking a little bit of a break but I'm not entirely convinced that the move lower on rates is over."

The People's Bank of China unveiled an interest-rate reform over the weekend aimed at lowering borrowing costs for Chinese companies. In Germany, the government is reportedly preparing fiscal stimulus measures in case the country's economy falls into a recession. Economic growth in China and Germany has slowed down this year amid tighter trade conditions, leading investors to rush into safe havens like the 10-year Treasury note.

Last week, the 10-year yield fell to its lowest level in more than three years and briefly traded below its 2-year counterpart. This is referred to as a yield-curve inversion and is seen by traders as a potential signal that a recession may be on the horizon.