Stock Market Hits Record Highs

Stocks jumped to new records on Monday after U.S. and China officials cooled tensions over the weekend, laying the groundwork for President Donald Trump and China President Xi Jinping to clinch a trade deal this week.

The S&P 500 climbed 1.23% to 6,875.16, its first close ever above the 6,800 level, while the Nasdaq Composite rallied 1.86% to 23,637.46, bolstered by a rise in Nvidia and other chip stocks. The Dow Jones Industrial Average jumped 337.47 points, or 0.71% to 47,544.59. All three of the major averages closed at record highs, along with the Russell 2000 small-cap benchmark.

“I think we have a very successful framework for the leaders to discuss on Thursday,” said Treasury Secretary Scott Bessent from the ASEAN Summit in Kuala Lumpur, Malaysia.

The framework potentially includes a delay of China’s rare earth export restrictions that caused the latest trade flare-up, the withdrawal of Trump’s threatened 100% tariffs on China that were set to start Nov. 1 and a resumption of Chinese purchases of American soybeans. The agreement may also include a resolution of the TikTok dispute, with the U.S. getting a deal for the domestic version of the social video app.

“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said on Monday from Air Force One.

Chipmakers, the sector with the most to lose from tensions with China, supported the rally Monday. Nvidia as well as others such as Broadcom rose more than 2%. Tesla jumped 4.3%.

Qualcomm moved up 11% and had reached a new all-time high earlier in the trading day after the company announced new artificial intelligence chips, a move that puts it in competition with Nvidia and AMD.

“If we end up with some sort of a favorable trade agreement between the U.S. and China, then the two largest trading partners are once again working together. That would also be a very positive sign,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC. “A lot of the forecasts for technology have been without the benefit of China, so once you can add China back into the equation, that would probably be fairly optimistic for the markets.”

Big Tech companies’ upcoming earnings reports are on tap, with several “Magnificent Seven” stocks, including Alphabet, Amazon, Apple, Meta Platforms and Microsoft, set to release their third-quarter results this week. Investors also expect the Federal Reserve to reduce its benchmark interest rate on Wednesday, particularly after the Bureau of Labor Statistics released slightly cooler-than-expected inflation data last week.

“Small and mid caps are trading at a very steep discount to large caps, and so should we continue with rate cuts and the prospect of no recession, they also should do very well,” Stovall added.

Stocks are coming off a bullish week, with all three major indexes hitting record highs last Friday.