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NEW YORK  -Wall Street recovered some lost ground on Monday and benchmark U.S. Treasury yields hit a 3-1/2-year high at the start of an eventful week of corporate earnings, economic data, and an expected interest rate hike from the U.S. Federal Reserve.

All three major U.S. stock indexes were last modestly green as the 10-year Treasury yield crept closer to the 3% mark and touched its highest level since December 2018.

U.S. stocks' modest rebound comes in the wake of the S&P 500's fourth straight weekly decline which capped its worst January-April percentage drop since 1932, as market participants girded their loins for an expected 50-basis-point interest rate rise at the conclusion of the Fed's two-day monetary policy meeting on Wednesday.

"There are several crosswinds right now," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "The first is the Fed, the second is the war (in Ukraine) and the third is inflation."

"Most economies are headed for a hard landing – a recession - and that’s what the market is discounting now," Cardillo added.

A report from the Institute for Supply Management showed U.S. factory activity losing steam, its purchasing managers' index (PMI) coming in well below consensus.

This followed a PMI report from China which showed factory activity contracting for the second straight month as widespread COVID-19 shutdowns disrupted production and supply chains.

The Dow Jones Industrial Average rose 188.63 points, or 0.57%, to 33,165.84, the S&P 500 gained 31.09 points, or 0.75%, to 4,163.02 and the Nasdaq Composite added 153.37 points, or 1.24%, to 12,488.01.

The glum China factory data dragged European stocks sharply lower, although the STOXX 600 had partly recovered from a sudden 3% plunge earlier in the session, what some brokers called a "flash crash" caused by an erroneous trade. [.EU]

The pan-European STOXX 600 index lost 1.05% and MSCI's gauge of stocks across the globe gained 0.18%.

Emerging market stocks lost 0.40%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.46% lower, while Japan's Nikkei lost 0.11%.

U.S. Treasury yields gained ground, with long-dated debt hitting multi-year highs.

Benchmark 10-year notes last fell 24/32 in price to yield 2.9768%, from 2.885% late on Friday.

The 30-year bond last fell 52/32 in price to yield 3.038%, from 2.946% late on Friday.

Crude prices plunged over demand worries driven by the bleak factory data from China, the world's largest oil importer. [O/R]

U.S. crude fell 2.73% to $101.83 per barrel and Brent was last at $104.35, down 2.6% on the day.

The dollar hovered just below a 20-year high against a basket of currencies ahead of the Fed's expected rate hike as investors focused on the possibility that the FOMC could adopt an even more hawkish stance than expected.

The dollar index rose 0.48%, with the euro down 0.05% to $1.0536.

The Japanese yen weakened 0.19% to 130.10 per dollar, while Sterling was last trading at $1.2531, down 0.32% on the day.

Gold prices slipped, edging closer to 2-1/2-month lows as investors anticipated a hefty interest rate hike from the Fed aimed at cooling inflation.

Spot gold dropped 1.8% to $1,863.24 an ounce.