Investors are watching economic data closely for clues about the Federal Reserve’s path for raising interest rates. Fears that the Fed could aggressively raise rates and potentially drive the economy into recession have stoked volatility in global markets this year. 

But trading has been quieter in recent weeks as investors gear up for coming central bank decisions and crucial economic data. The Dow industrials fell 0.9% last week, its smallest weekly change in about a month. The S&P 500 lost 1.2% last week while the Nasdaq ended down 1%.

“We seem to be in a kind of wait-and-see mode,” said

Craig Erlam,

senior market analyst at Oanda in London. “We’ve entered a phase where a lot of interest-rate increases are priced in. A lot of growth slowdown is priced in. We are still seeing intraday volatility, but it does seem to have stabilized.”

A key test for markets will be Friday’s U.S. consumer-price index. The closely watched inflation gauge is expected to rise 8.2% in May from a year earlier, according to economists surveyed by The Wall Street Journal. Excluding food and energy, price growth is expected to cool slightly to an annual rate of 5.9% in May from 6.2% the previous month.

Investors have been searching for signs that inflation has peaked, but inflation reports continue to show little sign that prices are easing. 

“There was quite a clear disappointment about how modest the pullback in inflation was last month,” Mr. Erlam said.

Fed officials have indicated they plan to raise interest rates by half a percentage point at next week’s policy meeting, and by the same amount again in July. 

Tesla

shares gained 4% in premarket trading, partially recovering from a 9.2% fall on Friday after Chief Executive

Elon Musk

said the electric vehicle maker will cut 10% of its salaried workforce, citing concerns about the global economy. 

Amazon.com

shares rose 0.6% to $122.35 premarket. Monday will mark the first day of trading since the company executed a 20-for-1 stock split. Before the split, Amazon shares were $2,447 a share.

Shares of

Keurig Dr Pepper

rose 7.9% ahead of the bell, while

VICI Properties

rose 8.6% and ON Semiconductor rose 7.4% after S&P Dow Jones Indices said the three companies will join the benchmark S&P 500 index this month.

Energy prices continued to climb Monday, with Brent crude rising to more than $120 a barrel. Prices for Brent, the global crude benchmark, have risen nearly 55% this year as Russia’s war in Ukraine has disrupted global commodity markets.

In the bond market, the yield on 10-year U.S. Treasurys advanced to 2.953%, from 2.940% Friday, as investors sold government bonds. Yields and bond prices move inversely. Bond yields have been on the rise in recent weeks but remain below their recent high of 3.124% set in early May.

Overseas, the British pound rose 0.5% against the U.S. dollar to $1.2553 as Prime Minister

Boris Johnson

is set to face a vote of confidence in his leadership on Monday. Mr. Johnson’s poll ratings have fallen amid revelations that he held parties in Downing Street during Covid-19 lockdowns.

The U.K.’s FTSE 100 rose 1.2% after being closed since Wednesday due to the four-day Platinum Jubilee weekend, celebrating Queen Elizabeth II’s 70 years on the throne. 

The pan-continental Stoxx Europe 600 rose 0.9%. Investors in Europe will be watching the European Central Bank’s policy meeting on Thursday, where it is expected to lay out its plans for unwinding bond purchases and raising interest rates. The ECB is expected to raise rates for the first time in 11 years in July as it seeks to contain surging inflation.

Asian markets rallied as China continued to ease Covid-19 restrictions in major cities. China’s Shanghai Composite rose 1.3% while Hong Kong’s Hang Seng Index gained 2.7%. Japan’s Nikkei 225 rose 0.6%.

Write to Chelsey Dulaney at chelsey.dulaney@wsj.com