Investors powered U.S. stocks to broad gains Thursday, cheering plans for another round of trade negotiations between Washington and Beijing, and drawing encouragement from a batch of positive economic data.
The Dow Jones Industrial Average surged nearly 400 points, bond yields jumped and the price of gold fell as investors regained a bigger appetite for riskier holdings.
Markets have been rattled this summer as the longstanding trade war between the U.S. and China escalated. Past rounds of negotiations have failed to yield progress. Even so, news Thursday that envoys from Washington and Beijing plan to hold talks next month elicited fresh optimism on Wall Street that the world's largest economies may yet find a way to resolve their costly trade war.
Investors have been worried that uncertainty over the conflict and the fallout from tariffs goods imposed by both sides will exacerbate a slowdown in global economic growth and hurt corporate profits.
Still, it's going to take more than news of planned talks to give the market more than a short-term boost after more than a year of trade angst-fueled market volatility, said Willie Delwiche, investment strategist at Baird.
"We've seen headlines on trade so many times," Delwiche said. "It's kind of hard to believe that this news of talks is going to be somehow different from previous news of talks and yield something meaningful in terms of a deal or some sort of progress."
The S&P 500 gained 38.22 points, or 1.3%, to 2,976. The benchmark index is now 1.7% shy of its most recent all-time high set in late July.
The Dow rose 372.68 points, or 1.4%, to 26,728.15. The average was briefly up by 480 points.
The Nasdaq climbed 139.95 points, or 1.8%, to 8,116.83. Traders also favored smaller company stocks. The Russell 2000 index picked up 25.99 points, or 1.8%, to 1,510.75.
Thursday's rally took its cue from overseas markets, which also reacted positively to the news that negotiators from the U.S. and China have agreed to meet in early October.
The meeting would be the latest attempt to find a resolution to a trade war that has rattled global financial markets and threatened economic growth.
There has been no sign of progress in the trade conflict since Presidents Donald Trump and Xi Jinping agreed in June to resume deadlocked negotiations about trade and technology.
Negotiations between the world's largest economies have been tenuous and the trade war has been escalating with expanded tariffs on each other's products.
The latest escalation kicked in Sunday, with the U.S. imposing 15% tariffs on $112 billion of Chinese imports. Washington is planning to hit another $160 billion on Dec. 15, a move that would extend penalties to almost everything the United States buys from China. Beijing responded by imposing duties of 10% and 5% on a range of American imports.
U.S. tariffs of 25% imposed previously on $250 billion of Chinese goods are due to rise to 30% on Oct. 1.
Stocks were also bolstered Thursday by positive economic data showing that companies are still hiring at a solid pace and that productivity rose at a healthy rate last quarter.
Payroll processor ADP reported that U.S. businesses added 195,000 jobs in August, well above economists' expectations. The private report frequently diverges from the government's own employment report, which is scheduled to be released Friday. Economists expect that report will show 160,000 jobs were added.
Meanwhile, the Labor Department reported that overall productivity rose 2.3% during the second quarter, also beating economists' growth forecasts.
The positive report gave already rising bond yields an additional push. The yield on the 10-year Treasury note rose to 1.57% from 1.46% late Wednesday, a big move.
"The combination of hopefulness from trade and slightly better than expected data revealed that a lot of people were maybe a little too dour in what they were expecting, at least in the near term," Delwiche said. "So, you've had this shift away from gold and away from bonds and into stocks."
Technology stocks led the gains for a second day in a row as investors again fed a bigger appetite for riskier holdings. Chipmakers, which are especially reliant on doing business with China, rose. Intel gained 2.4% and Nvidia climbed 6.5%.
Banks moved broadly higher as bond yields rose, which gives them more leverage to charge higher interest rates on loans and garner more profit. JPMorgan Chase added 2.3% and Bank of America gained 3%.
Consumer-focused companies also rose broadly. Nike, which stands to benefit if the trade war ends sooner rather than later, added 2.4%. Amazon rose 2.2%.
Investors also bid up shares in companies whose latest quarterly results beat Wall Street's forecasts.
Signet Jewelers surged 26.6%. The company, which operates Kay, Zales and Piercing Pagoda stores, also raised its own profit forecast for the year. G-III Apparel jumped 27.2% after the company, which owns DKNY and Wilson's Leather brands, cited gains from its wholesale business during the quarter.
Stocks in Europe finished broadly higher as political developments in Britain point to a less chaotic exit from the European Union.
Britain's Parliament has been pushing back against Prime Minister Boris Johnson and hope to make a deal with the EU before leaving on Oct. 31. Leaving the 28-member trading bloc without a deal could hurt Britain's economy.
In commodities trading, benchmark crude oil rose 4 cents to settle at $56.30 a barrel. Brent crude oil, the international standard, added 25 cents to close at $60.95 a barrel. Wholesale gasoline rose 2 cents to $1.55 per gallon. Heating oil climbed 1 cent to $1.89 per gallon. Natural gas fell 1 cent to $2.44 per 1,000 cubic feet.
Gold fell $34.90 to $1,515.40 per ounce, silver dropped 73 cents to $18.66 per ounce and copper rose 4 cents to $2.62 per pound.
The dollar rose to 106.95 Japanese yen from 106.41 yen on Wednesday. The euro strengthened to $1.1036 from $1.1032.