Investing.com - Wall Street extended its rally Tuesday on optimism the U.S. and China may find a solution to their bitter trade dispute and a rally in industrials led by Boeing.
The Dow Jones Industrial Average closed 1.09% higher. The S&P 500 added 0.97%, while the Nasdaq Composite jumped 1.08%.
The Wall Street Journal, citing sources, reported that trade talks between the U.S. and China have led to progress on issues, including the purchase of U.S. goods and services, prompting a sharp rally in the broader market.
The trade talks are set to continue through Wednesday, Reuters reported, raising investor hopes both parties would continue to narrow some of their differences ahead of the 90-day trade-war truce deadline slated for March 1.
The trade war has plagued market sentiment, but some on Wall Street are now expecting a short-term rally on trade progress.
Morgan Stanley said its base case is now that current negotiations will result in an outcome that "at least takes further tariff escalation off the table in a sustainable manner."
Beyond trade, industrials perked up the broader market, led by Boeing (NYSE:BA) as the aircraft maker revealed a strong fourth-quarter delivery report.
Boeing said 238 commercial airplanes were delivered during the latest quarter, up from 209 reported a year ago and above the FactSet consensus of 235 deliveries. Its shares rose 4%.
Tech also paved the way for the rally on Wall Street as investors continued to snap up FAANG stocks following the carnage last month.
Facebook (NASDAQ:FB) surged 3%, Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) rose 2%, while Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL) also closed higher.
Chip stocks struggled to join in on the rally as Samsung's (KS:005930) profit warning soured sentiment.
Nvidia (NASDAQ:NVDA) fell 2.5%, KLA-Tencor (NASDAQ:KLAC) lost 1.6% and Applied Materials (NASDAQ:AMAT) slumped 4%.
Energy, meanwhile, continued to add to recent gains on the back of a relentless rise in oil prices ahead of a weekly petroleum report from the Energy Information Administration due Wednesday.
On the corporate front, embattled utility company Pacific Gas & Electric (NYSE:PCG) plunged 7.3% after ratings agency S&P downgraded the company's debt to junk status.
The move comes as the utility is facing billions of dollars in liabilities and lawsuits filed by victims of California's Camp Fire.
"A non-IG rating pushes PCG to post $800 million of cash collateral to counterparties and will likely make access to the financing markets even more challenging and expensive," Citigroup said in a note to clients.
Top S&P 500 Gainers and Losers Today:
Nektar Therapeutics (NASDAQ:NKTR), up 11.1%, Union Pacific (NYSE:UNP), up 8.7%, and Monster Beverage (NASDAQ:MNST), up 6.2%, were among the best S&P 500 performers of the session.
Pacific Gas & Electric (NYSE:PCG), down 7.3%, Illumina (NASDAQ:ILMN), down 4.6%, and Gap (NYSE:GPS), down 4.2%, were among the worst S&P 500 performers of the session.