Wall Street closed higher on Thursday as investor confidence improved, driven by easing concerns over the stability of US banks and renewed optimism surrounding trade talks between the United States and China.
The Dow Jones Industrial Average rose 1.4%, the S&P 500 gained 1.2%, and the Nasdaq Composite advanced 1.5%, marking a strong rebound after several volatile sessions earlier in the week.
Market analysts attributed the gains to encouraging updates from the banking sector and signs of progress in US–China trade negotiations, both of which have weighed heavily on investor sentiment in recent weeks.
Major US banks, including JPMorgan Chase, Bank of America, and Citigroup, all recorded modest gains as fears of financial instability began to subside. Investor confidence improved following reports that regulators were reviewing liquidity safeguards and that deposit levels had stabilized across regional banks.
Chief market strategist Lindsey Bell of Carson Group said the rally reflects a sense of relief among investors after weeks of uncertainty.
“The panic over banking contagion appears to be cooling off,” Bell said. “Markets are starting to regain their footing as the immediate risks seem to have been contained.”
Regional banks also showed signs of recovery, with the KBW Bank Index climbing 2.3% as traders grew more optimistic about regulatory measures to protect depositors and stabilize lending conditions.
Investor optimism was further boosted by diplomatic developments in the ongoing trade discussions between Washington and Beijing. Sources close to the negotiations said both sides had agreed to resume talks aimed at reducing tariffs and reopening access to key export markets.
“The tone of communication between the US and China has improved significantly,” said Michael Hewson, chief analyst at CMC Markets. “Even if no major deal is reached soon, dialogue alone is helping calm investor nerves.”
The easing tensions helped lift shares in major exporters, including Apple, Caterpillar, and Boeing, which had been among the hardest hit by trade-related uncertainties.
The Federal Reserve also contributed to market calm after signaling that it may pause further interest rate hikes, citing easing inflationary pressures and a need to assess the impact of earlier monetary tightening.
Economists believe the Fed’s more cautious tone has reassured investors that policymakers are prioritizing financial stability amid mixed global economic signals.
“Investors are interpreting the Fed’s stance as a sign that aggressive rate increases may finally be behind us,” said Jeffrey Roach, chief economist at LPL Financial. “That’s creating a more favorable environment for equities.”
Technology stocks were among the biggest winners, with Microsoft, Amazon, and Nvidia each rising more than 2%. The sector benefited from renewed risk appetite and growing optimism about corporate earnings heading into the final quarter of the year.
Energy shares also advanced as oil prices rebounded slightly, with Brent crude trading near $86 per barrel.
Despite the rally, analysts warned that volatility could return if inflation data or geopolitical tensions shift market expectations.
“The fundamentals remain fragile,” said Victoria Greene, chief investment officer at G Squared Private Wealth. “We’re seeing a short-term relief rally, but long-term stability will depend on sustained policy coordination and clearer global economic signals.”
Still, the latest gains reflect growing optimism that the worst of the recent financial jitters may be over, at least for now.
