U.S. stocks closed solidly higher Thursday after American and Chinese officials declared a tentative resumption of tariff talks, viewed by Wall Street as a sign of progress in the yearlong trade conflict between the economic superpowers.
Also helping boost sentiment were a series of bullish economic reports, including data from ADP estimating the private sector added 195,000 jobs in August, and a better-than-expected reading on activity in the U.S. services sector.
How did the major benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.15% rose 372.68 points, or 1.4%, to 26,728.15, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.36% advanced 38.2 points, or 1.3%, to reach 2,975.98. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.72% rose 139.95 points to 8,116.83, a gain of 1.8%.
The Dow’s rally marks its sharpest point and percentage gain since Aug. 13, according to FactSet data. The Nasdaq notched its best gain since Aug. 13, while S&P 500 performed better than any trading day since Aug. 16.
What drove the market?
China’s Commerce Ministry, in a statement , said that Beijing and Washington had set a tentative date for “early October” after a conference call between Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer, according to translated version of the text .
U.S. trade officials confirmed the talks and noted that both sides must hold discussions with lower-level officials to lay the groundwork for more serious negotiations to take place next month.
The communication between China and the U.S. comes after tariffs were raised by both sides over the weekend and another increase is set to take place in the coming weeks. The tariff dispute between the world’s two largest economies has proved to be a crucial driver for market sentiment because the trade battle has put pressure on the global economies and threatened to throw the U.S. into a recession.
A new round of Sino-American trade negotiations had been expected in September until President Donald Trump announced an increase to import duties and China declared retaliatory measures.
“Putting to one side the fact that these talks were supposed to be happening this month, and the fact that this has been a familiar pattern for two years now, markets still prefer to take an optimistic view,” wrote Michael Hewson, chief market analyst at CMC Markets, in a Thursday research note.
However, the analyst said that the recent news on trade developments reflects a familiar playbook in which the market rallies and then falls on reports of stalled progress.