The S&P 500 and Nasdaq closed at all-time highs Thursday on renewed optimism that the U.S. and China are close to reaching a deal in their costly trade war.
Financial, technology and health care stocks powered much of the rally, which gave the S&P 500 its second straight gain and erased its losses from earlier in the week.
Bond yields surged and real estate companies, utilities stocks and household goods makers fell as investors shifted money away from safe-play investments.
The market has been quick to react to headlines and remarks out of the Trump administration about the 16-month trade war, and Thursday was no different.
Shares jumped in the early going after President Donald Trump said that the U.S. is getting close to a “big deal” with China. Traders were also encouraged by a Wall Street Journal report saying Washington has offered to slash existing tariffs and cancel new ones set to kick in on Sunday in exchange for more agricultural purchases and intellectual property protection.
“If we do see the tariffs removed, that’s saying, ‘OK, China must be agreeing to things or we must be right there,'” said Ben Phillips, CIO at EventShares. “That’s why the market is looking at tariffs as the bellwether to a trade deal.”
The S&P 500 climbed 26.94 points, or 0.9 percent, to 3,168.57. The index is up about 0.5 percent from its last all-time closing high on Nov. 27.
The Dow Jones Industrial Average rose 220.75, or 0.8 percent, to 28,132.05. The Nasdaq rose 63.27 points, or 0.7 percent, to 8,717.32. The index is now up about 0.1 percent its record set on Nov. 27.
The Russell 2000 index of smaller company stocks climbed 12.89 points, or 0.8 percent, to 1,644.81.
China’s Ministry of commerce said Thursday that its negotiators were in “close communication” with their American counterparts ahead of the new round of tariffs, but gave no indication whether the trade talks were making progress.
But late Thursday, Myron Brilliant, head of international affairs for the U.S. Chamber of Commerce, confirmed that both sides were close to inking a modest trade deal that would suspend the new tariffs and reduce existing ones by an unspecified amount. In return, China would buy more U.S. farm products, increase American companies’ access to the Chinese market and tighten protection for intellectual property rights, said Brilliant, who has been briefed by both sides.
