It didn’t take long for the US stock market to make up for the last few days of losses.

The Dow Jones Industrial Average jumped 385 points, the S&P 500 increased by 3.5% and the Nasdaq was up 4.6% on Friday morning.

The rally was fueled by rumors that the US government may not have to shut down because it will pass an increase in the debt ceiling. As the country has to hit its debt limit, the federal government will not be able to issue any new debt, although it can continue to pay its existing bills.

“The markets felt positive about the resolution of the debt ceiling and the upcoming budget,” said Anshuman Jain, senior vice president and co-head of investment management and research at Brandywine Global Investment Management.

Last week, a number of markets around the world plunged on growing concerns that the US government would not reach a deal to increase the debt ceiling. Government shutdown fears and growing evidence of slower growth in China caused a sell-off on Wall Street.

In fact, most experts believe Wall Street is so oversold, with the S&P 500 down 15% from its record high last month, that this could be the best month for the market in years.

However, Jain warned that the markets would continue to be volatile until Washington discusses the federal budget for 2020. When the federal government stopped increasing the debt ceiling in 2013, the economy plunged into a recession.

An above-average number of indexes in Europe markets closed positive, led by London, Paris and Frankfurt. After a recent sell-off, shares of drugmaker GlaxoSmithKline (GSK) jumped 6% after posting a slightly better-than-expected quarterly profit.

The economic calendar in the US has a packed week ahead with a number of major reports expected. On Wednesday, the US government is expected to report that nonfarm payrolls rose by 157,000.

The Fed will release minutes from its most recent meeting on Wednesday, which are expected to reveal that it’s still on track to raise interest rates again at its next meeting in June. The Fed may also provide a more detailed update on inflation. Last month, the core PCE price index rose at the slowest pace in seven years.

Also, the European Central Bank will announce next week what it plans to do to boost the region’s struggling economy. ECB President Mario Draghi said during a press conference that the bank has discussed extending its bond-buying stimulus program.

And investors will be watching next week for news on jobs and inflation.

By Sinead Carew, CNNMoney