Stocks jump and bonds tumble on plans for renewed U.S.-China trade talks

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.

Yields on two-year Treasury notes jumped as much as 14 basis points, which would have been the largest full-day increase in a decade, before inching back.

Markets have been rattled this summer as the long-standing 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 imposed on goods by both sides will exacerbate a slowdown in global economic growth and hurt corporate profits.

The Standard & Poor’s 500 index 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.

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 an additional $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. 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.

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.

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%.

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%.

In commodities trading, benchmark crude oil rose 4 cents to $56.30 a barrel. Brent crude oil, the international standard, added 25 cents to $60.95 a barrel.

Gold fell $34.90 to $1,515.40 an ounce, silver dropped 73 cents to $18.66 an ounce and copper rose 4 cents to $2.62 a pound.

The dollar rose to 106.95 Japanese yen from 106.41 yen Wednesday. The euro strengthened to $1.1036 from $1.1032.