Dow rallies 350 points as expectations of limited US-China trade deal increase

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Stocks rallied Friday as traders grew more optimistic over the possibility of a limited trade deal between China and the U.S.

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The Dow was up more than 400 points, while the S&P 500 rose 1.5% and the Nasdaq jumped 1.7%. The gains put the Dow and S&P 500 on track to snap a three-week losing streak.

Big tech shares such as Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all gained more than 1%. Bank stocks also gained steam as Bank of America and J.P. Morgan Chase rose more than 1.5% each.

Chipmakers rose broadly. Micron Technology gained more than 2% along with Xilinx.

President Donald Trump told reporters on Thursday that talks between the two countries were going “really well.” His comments came after he tweeted that he would meet with Chinese Vice Premier Liu He at the White House on Friday. The meeting is scheduled to take place at 2:45 p.m. ET.

Trump’s comments were followed by China’s securities regulator announcing a timetable to remove a requirement that foreign financial companies must have a Chinese investor. Meanwhile, a White House official told Reuters that Thursday’s talks went well, “probably better than expected.” The New York Times also reported the two sides could announce a deal that would avoid raising tariffs on Chinese goods.

The U.S.-China trade war has dragged on for more than a year. In that time, the U.S. has targeted billions of dollars worth of Chinese goods with tariffs. China has retaliated with levies of its own, sparking fears of slower global economic growth and weaker corporate earnings.

“While markets are reacting positively to the likelihood of a limited U.S.-China trade deal … it’s critical to remember that all existing tariffs are expected to remain in place,” said Alec Young, managing director of global markets research at FTSE Russell. “Until we get a deal that ends existing tariffs, 2020 earnings visibility will remain murky, especially in light of the ongoing weakness in the global growth outlook.”

On the data front, consumer sentiment figures for October are set for release at 10 a.m. ET.