The rally in stocks regained traction Monday as speculation that the Federal Reserve will tighten policy at a gradual pace outweighed concern about the central bank’s hawkish pivot. Treasuries dropped.

A relative sense of calm returned to markets, with risk assets rebounding after last week’s selloff and a jittery session in Asia. Energy, financial and industrial stocks drove gains in the S&P 500 — up 550 points, or 1.7%, at 33839 by midafternoon, as it broke a five-day downward trend — while high-flying tech companies underperformed. A gauge of small caps climbed about 2%. Amazon.com Inc. fell as the online retail giant kicked off its Prime Day sale, with merchants curbing discounts amid rising shipping costs. Bitcoin sank as China intensified its cryptocurrency crackdown.

A chorus of influential officials who spoke Monday said the Fed’s policy outlook needs to be more attuned to inflation risks. Dallas Fed President Robert Kaplan said he favors starting the process of tapering the central bank’s ongoing bond purchases “sooner rather than later,” while his counterpart from St. Louis James Bullard called it “appropriate” that officials last week opened the taper debate.

Despite the more hawkish rhetoric, Fed tightening should happen at a much slower pace when compared to the rush to loose policy at the start of the pandemic, according to Charles Schwab & Co.’s Jeffrey Kleintop.

“The way back up in terms of rate hikes may be much more gradual, and that might allow economically sensitive stocks to perform well,” said Kleintop, chief global investment strategist at the firm.

Meanwhile, Former Treasury Secretary Lawrence Summers and billionaire investor Ray Dalio said the U.S. is headed for a period of overheating and inflation that could threaten the economic recovery, even as the Fed signaled it would step in before that happened.