Stocks closed higher on Thursday as a rebound from sharp losses last month continued after comments from President Donald Trump indicated potential progress in U.S.-China trade relations.
The Dow Jones Industrial Average gained 264.98 points to 25,380.74 as DowDuPont outperformed, bringing its three-day gains to more than 900 points. The climbed 1.1 percent to 2,740.37, with the materials leading. The Nasdaq Composite advanced 1.8 percent to 7,434.06 ahead of Apple's quarterly earnings report.
Trump said in a tweet Thursday that he had a "long and very good conversation" with Chinese President Xi Jinping on trade. He also said meetings between the two at the upcoming G-20 summit are being scheduled.
"It is positive that the two leaders are speaking," said Jon Adams, investment strategist at BMO Global Asset Management. "We think shorter term we'll have these tensions as a headwind for the market, but in the intermediate term we think a deal will get done."
Thursday's moves come after investors capped off a volatile October with strong gains. The S&P 500 posted back-to-back gains of more than 1 percent to end last month.
But "as pleasant as the last two sessions have been to experience they do not by themselves indicate that the worst is over," said Michael Shaoul, chairman and CEO of Marketfield Asset Management. "All we can say so far is that Monday's accelerated drop lower found good support for the S&P 500 just above 2,600, and any subsequent retest should at least struggle to penetrate this level."
But despite the recent rally, the Dow closed last month down 5.1 percent, its biggest one-month fall since January 2016. The S&P 500 lost $1.91 trillion in October, according to S&P Dow Jones Indices analyst Howard Silverblatt. Losses were spread widely across industry sectors. October was also the worst month for the S&P 500 since September 2011.
Equities sold off last month amid concern about rising interest rates and U.S-China trade tensions, as well as worries that earnings growth may be slowing down.
"I don't think we're out of the woods yet," said Aaron Clark, portfolio manager at GW&K Investment Management. "Sentiment has clearly changed more than fundamentals."
"I think we were oblivious to the risks we were facing ... Now we're sort of walking on eggshells," Clark said.
On Thursday, sentiment was lifted by better-than-forecast earnings from DowDuPont. Shares of DowDuPont rose 8.1 percent, its biggest one-day gain since Dec. 9, 2015. Tech giant Apple is scheduled to report earnings after the bell Thursday. The company's stock gained 1.5 percent.
Overall, corporate earnings have been mostly better than expected this season. FactSet data show 76.9 percent of S&P 500 companies that have reported have topped analyst expectations for calendar third-quarter earnings.
In economic data, initial U.S. weekly jobless claims fell to 214,000 last week while continuing claims remained at their lowest levels since 1973. The data come ahead of the monthly jobs report, which is set for release Friday morning.