Stocks rose slightly on Tuesday as retail shares outperformed, lifting the major averages to fresh record highs.
Retailers rose broadly after Best Buy posted quarterly earnings that beat analyst expectations, sending its stock up more than 9%. The electronics retailer also raised its fiscal 2020 earnings forecast. Dick's Sporting Goods also rallied more than 18% on better-than-expected earnings.
The SPDR S&P Retail ETF (XRT) climbed 0.6% while Amazon shares closed 1.3% higher. Retail's strong performance comes ahead of Black Friday, which unofficially marks the start of the holiday shopping season. Expectations for the season are high as the National Retail Federation expects sales to rise about 4%.
Tuesday's moves built on the previous session's rally that was sparked by optimism around the U.S.-China trade talks. The Dow rallied more than 150 points on Monday while the S&P 500 and Nasdaq advanced 0.8% and 1.3%, respectively.
China's ministry of commerce said Monday that the leaders of China and the U.S. spoke over the phone. "Both sides discussed resolving core issues of common concern, reached consensus on how to resolve related problems (and) agreed to stay in contact over remaining issues for a phase one agreement," the Chinese-language statement said, according to a CNBC translation.
President Donald Trump also said Tuesday the U.S. and China are in the throes of reaching a trade deal.
The U.S.-China trade war has been going on for nearly two years, dampening investor sentiment around corporate profit and economic growth. The Federal Reserve also sees the conflict as a detriment to the U.S. economy.
Dallas Fed President Robert Kaplan told CNBC's Steve Liesman on Tuesday he expects the U.S. economic growth to be "weak" in the fourth quarter, citing worries around the trade war.
It is yet unclear if both sides will be reaching a compromise before Dec. 15, when new U.S. tariffs on Chinese goods are set to kick in.
"Both China and the US have a clear interest in getting a phase-one trade deal completed relatively soon to calm financial markets and reduce the drag on their economies from the uncertainty attributable to the trade war," Ed Yardeni, president and chief investment strategist at Yardeni Research, wrote in a note. "If there is no deal, stock prices could crater. However, Trump views the [Dow] as his most important poll."
On the data front, the S&P Case-Shiller index showed home price gains accelerated in September, gaining 3.2% annually. Consumer confidence dipped slightly in November, data from the Conference Board showed.
—CNBC's Silvia Amaro contributed to this report.