Stocks rallied to records Thursday on renewed optimism that the U.S. and China are inching closer to a phase-one trade deal. 

The Dow Jones industrial average jumped 221 points, or 0.8%, to close at 28,132.05. The broader Standard & Poor’s 500 rose 0.9% to end at 3,168.57, a fresh all-time high. The Nasdaq Composite also finished at a record, rising 0.7% to 8,717.32.

Wall Street has been watching closely for any developments in the ongoing trade negotiations all week as the nations head for another escalation. A new round of U.S. tariffs on Chinese goods are set to kick in on Sunday and raise the prices of popular products including laptops and cellphones. 

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Stocks moved higher in midday trading Thursday as investors jumped on a statement from President Donald Trump that the U.S. is getting close to a “big deal” with China. All three major stock indexes hit intraday highs following the tweet before paring gains. 

Traders were also encouraged by a Bloomberg report saying U.S. negotiators had reached the terms of a phase-one trade deal with China that awaited Trump’s approval.

Since the start of 2018, Washington and Beijing have imposed tariffs on billions of dollars’ worth of each other’s goods. The U.S. had threatened to impose 15% levies on about $160 billion of Chinese imports on Sunday. 

For the global economy to remain resilient, investors are looking for signs that the trade dispute between Washington and Beijing is de-escalating, analysts said. The tariff battle threatens to raise costs for companies, which investors fear will dent profit growth and further slow global economic activity. 

"The trade issue with China has been one of the biggest drivers of a slowdown in global growth," said Jimmy Lee, founder and chief executive at The Wealth Consulting Group. "How the economy is doing is a big campaign issue heading into an election year, and I think the president understands that." 

Trade-sensitive stocks including machinery giant Caterpillar and tool maker Stanley Black & Decker jumped 1.9% and 5.1%, respectively. 

Investors sold safe-haven assets like government bonds and gold Thursday in favor of riskier assets like stocks. The yield on the 10-year Treasury jumped to 1.89% from 1.79% late Wednesday. Yields move inversely to bond prices.

Banks helped lead the gains as bond prices fell, sending yields higher. Bank of America rose 3.1%. Higher yields allow banks to charge more lucrative interest rates on mortgages and other loans. 

Technology companies also made strong gains. The sector is one of the most sensitive to swings in trade because many of the companies rely on China for sales and supply chains. Cisco rose 3.1%.

Real estate companies and utilities lagged the market in another sign that investors were shifting money away from safe-play investments.

Damian J. Troise of The Associated Press contributed to this report.