Stocks closed broadly higher Wednesday amid renewed hopes on Wall Street that a U.S. trade deal with China may be nearing, despite tough recent talk from President Donald Trump.
The gains snapped a three-day losing streak for the S&P 500, though the benchmark index remains on track for a weekly decline.
The market has swung sharply for months on every hint of progress about talks between the world's largest economies, and the latest flip-flop followed a report from Bloomberg News saying U.S. negotiators expect a “Phase 1” trade agreement to be completed before U.S. tariffs are set to rise on Chinese products Dec. 15.
The report came a day after Trump said he wouldn't mind waiting until after the 2020 elections for a deal, a remark that officials reportedly called off the cuff but nevertheless sent markets skidding.
“The trade war will be the key driver of sentiment in the immediate few weeks,” DBS Group analysts wrote in a report.
Health care and financial stocks drove much of Wednesday's rally. Energy companies notched the biggest gain following a 4.2% increase in the price of U.S. crude oil.
Materials stocks ended essentially flat.
The S&P 500 rose 19.56 points, or 0.6%, to 3,112.76. Despite recovering some losses, the index is still down 0.9% for the week.
The Dow Jones Industrial Average climbed 146.97 points, or 0.5%, to 27,649.78. The Nasdaq composite gained 46.03 points, or 0.5%, to 8,566.67. The Russell 2000 index of smaller company stocks picked up 11.27 points, or 0.7%, to 1,613.90.
Treasury yields also recouped some of their sharp drops from earlier in the week. Rising optimism on trade means less demand for safe investments, and when prices for Treasurys fall, their yields rise.
The yield on the 10-year Treasury rose to 1.77% from 1.71% late Tuesday. It was at 1.83% on Monday.
The stock gains are the first so far this month since the market closed out a strong November rally that brought major indexes to all-time highs.