The major stock indexes snapped multiday losing steaks Thursday as J. P. Morgan Chase led banks higher and iPhone maker Apple rebounded after dipping into bear market territory earlier in the week.
The Dow Jones Industrial Average erased a 200-point loss to finish the day up 208.77 points at 25,289.27 as both Apple and J.P. Morgan climbed about 2.5 percent. Caterpillar rose 3.4 percent, while Walmart and Home Depot both weighed on the blue-chip index.
The rose more than 1 percent to close at 2,730.2 as gains in financials, energy and technology offset losses in utility stocks. The tech-heavy Nasdaq Composite added 1.7 percent to climb to 7,259.03 as Alphabet added 1.5 percent and Netflix gained 1.1 percent.
The gains Thursday snapped a five-day losing streak in the S&P 500 and a four-day losing streak in the Dow.
Equities also appeared to rally in afternoon trading following a report said that the U.S. and China have doubled down on efforts to reach an agreement in the growing trade war, at the Group of 20 meeting later this month.
Representatives for President Donald Trump and China President Xi Jinping have intensified efforts to strike a deal following a phone call between the two leaders earlier this month, according to a Financial Times report. China reportedly responded to Washington's requests to deal with a range of American grievances, and the possibility of concessions was reviewed.
One person familiar with the situation told the FT that U.S. Trade Representative Robert Lighthizer has already informed some industry executives the next wave of tariffs was already on hold.
Stocks fell from their highs, however, after a spokesman for the U.S. Trade Representative told CNBC "the plan for the tariffs as covered in the Federal Register Notice dated Sept. 21, 2018 has not changed at all. Any reports to the contrary are incorrect."
Sentiment across the globe has improved on reports that China has delivered a written response to U.S. trade demands. U.S. government sources told Reuters on Wednesday that China had sent a response to U.S. demands on the ongoing trade negotiation, giving hopes to investors that the two sides might bring an end to the spat.
Financials were up on the day as J. P. Morgan buoyed the big banks higher after famed investor Warren Buffett's Berkshire Hathaway disclosed a new $4 billion stake in the company. Bank of America, also part of the Berkshire portfolio, rallied 2.5 percent. The SPDR S&P Bank ETF rose 1.7 percent.
Walmart missed on revenue estimates in the third quarter, contributing to a 1.9 percent drop in shares. Though the company reported strong e-commerce sales and raised full-year guidance, the sales miss and news that Buffett dissolved his stake in the company weighed on the stock.
"The hard part for most investors is not so much that earnings are disappointing or not ... the real issue is what's going to happen next year," said Bruce McCain, chief investment strategist at Key Private Bank. "There's a sense that it can't get too much better. Looking forward, with the market turmoil overseas and the recognition that the effect of the tax cuts will begin to wane, it's hard to think it'll get better."
Losses in consumer discretionary stocks were exacerbated by home improvement retailer Home Depot, which fell 1.4 percent in the wake of disappointing earnings at a major homebuilder.
KB Home sank 15 percent after the company cut its fourth-quarter sales forecast; peer homebuilder PulteGroup dropped 1.7 percent while Toll Brothers lost 5.9 percent.
Cisco shares rallied 5.5 percent after the tech giant beat on both the top and bottom lines for the first fiscal quarter. The San Jose, California-based Cisco reported revenue rose 7.7 percent as it takes action to mitigate the impact any future impact from the Trump administration's trade dispute with China.
So far, Cisco remains one of a handful of technology companies that has not seen headwinds as a result of tariffs between the two economic powerhouses, according to CEO Chuck Robbins.
"I can just tell you personally, I haven't had one conversation with any customer around the tariffs at this point," Robbins said during the company's earnings call. "Secondly, I think that once we got past the midterms, we've begun to hear some positive, at least, headlines relative to the discussions, and I remain fairly optimistic that this has become a top priority for the administration."
Sterling plunged by over 1.6 percent against the dollar Thursday morning after UK Brexit Secretary Dominic Raab resigned from his post. This piles yet more pressure on UK Prime Minister Theresa May as she tries to get her draft Brexit agreement through Parliament.
Bullishness following the forward progress in corporate earnings was offset, however, as brewing investor uncertainty around rising interest rates and an assertive Federal Reserve checked the major indexes.
Hedge fund billionaire Ray Dalio of Bridgewater Associates told CNBC on Thursday that despite the gradual interest rate hikes, the Fed has already damaged asset prices.
"We've raised interest rates to a level that it's hurting asset prices," the founder of Bridgewater Associates said in an interview with CNBC's "Squawk Box. " "We're in a situation right now that the Fed will have to look at asset prices before they look at economic activity. It's a difficult position."
Fed Chairman Jerome Powell touted the strength of the U.S. economy Wednesday evening, saying that markets should adjust to the idea that the central bank could hike interest rates at any time starting next year. Though Powell acknowledged that while the global economy is not as robust as it was last year, he added that domestic economic growth still looks strong.
The yield on the benchmark 10-year Treasury note fell to 3.112 percent Thursday. Bond yields rise as prices fall.
The U.S. central bank has hiked its overnight rate three times so far this year and is widely expected to do so again in December. Investors tend to see higher interest rates as a threat to profit growth and a hurdle for companies with large amounts of debt.
"I'm very happy about the state of the economy now," Powell said in an interview with Dallas Fed President Robert Kaplan. "Our policy is part of the reason why our economy is in such a good place right now."
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Nov. 10, the Labor Department said on Thursday. Retail sales rose 0.8 percent, higher than the 0.5 percent expected.