Stocks advance after Bessent says talks with China were successful before Trump-Xi meeting

Stocks experienced a significant surge on Monday, climbing closer to their all-time highs as oil prices and bond yields cooled their earlier dramatic gains. The S&P 500 rose 1.5%, inching within 0.4% of its record set last month, while the Dow Jones Industrial Average climbed 0.7% and the Nasdaq composite soared 2.3% to its own record high.

AI-focused companies, such as chip stocks and artificial intelligence firms, were the primary drivers of the market's upward momentum. Brent oil prices fell 3.4% to $100.34 per barrel, down from a near $110 peak last week, as some Middle Eastern crude reached customers through the Strait of Hormuz despite ongoing tensions with Iran.

While oil prices stabilized, Morgan Stanley's Michael Wilson warned of a potential near-term risk in oil, gasoline, and refined product prices that could slow the U.S. stock market's upward trajectory. Gasoline prices in the U.S. reached nearly $4.48 per gallon, up from $4.32 a week earlier and $3.18 a year ago. Treasury yields eased, with the 10-year yield falling to 4.95% from 5.01% last Friday, alleviating some pressure on the bond market.

U.S. Treasury Secretary Bessent praised the success of his recent talks with Chinese Vice Premier He Lifeng, signaling optimism for discussions during an upcoming U.N. General Assembly and a potential meeting between Chinese President Xi Jinping and U.S. President Trump. AI stocks continued to gain, with Advanced Micro Devices (AMD) surging 9.9% and reaching a total market value of $1 trillion, while Nvidia increased by 2.3%.

Cryptocurrency-related stocks also rallied after Bitcoin's price surpassed $86,000, reaching its January level. Coinbase Global and Robinhood Markets both saw gains of 3.5% and 2.9%, respectively. Additionally, Warner Bros. Discovery experienced a 10.8% jump following a settlement agreement between 12 states and Hollywood writers challenging the company's buyout by Paramount, while Paramount Skydance declined 2.9%.

The S&P 500 closed at 7,764.70, the Dow Jones Industrial Average reached 52,048.83, and the Nasdaq composite hit 27,122.09. Stock indexes worldwide also saw gains, including a 0.9% rise in France, a 1.2% increase in Hong Kong, and a 1.6% uplift in South Korea.