Stocks up as hopes rise for China talks

U.S. stocks climbed, while the dollar and Treasuries retreated as investors speculated the Trump administration would ease trade tensions with China.

The S&P 500 Index capped a fourth day of gains, briefly rising to an intraday record. The Russell 2000 Index closed at a record. The dollar extended its slide ahead of low-level trade talks with China. The 10-year Treasury yield rose for first time in three days before a meeting of central bankers later in the week.

“This is an abnormally sentiment-driven market that we’ve had all year, so a new high could cause on the margin some investors to either get nervous or to get bullish,” Max Gokhman, head of asset allocation for Pacific Life Fund Advisors, which manages $40 billion, said in an interview at Bloomberg’s New York headquarters. “I would argue probably more nervousness than bullishness at this point because we’re hitting a new high amidst failing trade talks with China, amidst peaking margins.”

U.S. shares rose Tuesday amid signs that talks between Chinese and American trade representatives may lead to some cooling of rhetoric on the monthslong spat. The Trump administration plans to slap tariffs on $16 billion of goods on the same day and China is poised to retaliate. Investors await clues on monetary policy as central bankers gather in Jackson Hole Friday.

Elsewhere, the Brazilian real fell to the weakest against the dollar in two and half years in the runup to an uncertain election. Turkey’s lira edged higher after two days of declines; the country’s markets are closed for most of this week. Futures in crude oil and industrial metals climbed, as emergingmarket stocks and currencies advanced.