Saeed Azhar, Kanchana Chakravarty and Sukriti Gupta
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By Saeed Azhar, Kanchana Chakravarty and Sukriti Gupta
NEW YORK (Reuters) -U.S. stock indexes closed higher on Tuesday, helped by gains in Nvidia and other chipmakers, as investors awaited possible negotiations between the United States and its trading partners for more clarity on Washington's tariff plans.
President Donald Trump and Chinese leader Xi Jinping are set to speak this week, the White House said on Monday, days after Trump accused China of violating a Geneva agreement to roll back tariffs and trade restrictions. Beijing said it would safeguard its interests and that the accusation was groundless.
The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks, according to a draft letter to negotiating partners seen by Reuters.
"The most important thing for investors is that the administration wasn't going to impose those much-larger-than-expected tariffs and just leave them on, which would have almost certainly led to a recession," said Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management.
"The fact that the U.S. is actively engaged with so many trading partners – China, the UK, Japan, the EU, etc. – has investors feeling more optimistic that we will avoid a recession."
In May, a softening of Trump's harsh trade stance allowed a recovery in risky assets, with the benchmark S&P 500 and the tech-heavy Nasdaq posting their biggest monthly percentage gain since November 2023.
The Dow Jones Industrial Average rose 214.16 points, or 0.51%, to 42,519.64, the S&P 500 gained 34.43 points, or 0.58%, to 5,970.37 and the Nasdaq Composite gained 156.34 points, or 0.81%, to 19,398.96.
Information technology stocks rose 1.5%, boosted by 2.9% gains in Nvidia. Chipmaker Broadcom hit a fresh record high after the company said it has begun to ship its latest networking chip that aims to speed AI. It rose 3.2%
"Commentary that Trump and Xi will speak started getting discussed yesterday and chips are likely a topic on the table," said Angelo Zino, a senior equity analyst at CFRA Research.
"Given Nvidia is essentially currently locked out of China, any discussion is prone to favor Nvidia and chips rather than hurt the story."
A U.S. Labor Department report showed job openings increased in April, but layoffs picked up, signaling a slowing labor market as tariffs impact the economic outlook.
Factory orders dropped sharply in April, as the boost from front-loading of purchases ahead of tariffs faded. Data from the Commerce Department's Census Bureau showed a 3.7% fall, after an unrevised 3.4% jump in March.
