Stocks Surge on Positive China Trade Talks and Tesla Boost as Investors Await Fed Rate Decision

Stocks Climb Amid Trade Optimism and Anticipation of Fed Decision

U.S. stocks rallied on Monday, buoyed by positive sentiment surrounding U.S.-China trade talks and anticipation of a pivotal Federal Reserve meeting later this week. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all saw gains, with the Nasdaq reaching a new record close.

Market Performance and Key Indicators

The S&P 500 climbed 0.5% to a fresh record. The Nasdaq Composite also advanced to a new all-time high, trading 0.8% higher. The Dow Jones Industrial Average rose 99 points, or 0.2%. These gains follow a strong week for the major indexes, with the Nasdaq notching a record close and the S&P 500 experiencing its best weekly showing since early August.

Trade Negotiations and TikTok Deal

U.S. and Chinese officials met in Madrid for another round of high-stakes trade talks. President Donald Trump indicated positive progress in a Truth Social post, potentially referencing a deal related to TikTok. However, reports also indicated the U.S. might proceed with a TikTok ban if China doesn't ease demands for reduced tariffs and tech restrictions. Treasury Secretary Scott Bessent stated the countries have an agreement on a framework for a TikTok deal.

Nvidia Probe and Tesla Surge

China's market regulator announced an ongoing probe into Nvidia, alleging violations of the country's anti-monopoly law, causing Nvidia shares to drop 1.8%. Conversely, Tesla shares jumped 7% after CEO Elon Musk disclosed an insider purchase of approximately $1 billion worth of the stock, signaling confidence in the company's shift towards robotics amidst increasing electric vehicle competition.

Federal Reserve Meeting and Interest Rate Expectations

Investors are keenly awaiting the Federal Reserve's policy meeting on Wednesday. The market is currently pricing in a 96% certainty of a quarter percentage point interest rate cut. Lower rates could further support the stock market, fueled by investor enthusiasm surrounding artificial intelligence (AI). Attention will also be on the Senate to see if Stephen Miran will be sworn in as a Fed governor in time for this week's FOMC meeting.