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U.S. dollar banknotes are stacked at the headquarters of the Korea Exchange Bank in Seoul, South Korea, on Monday, August 8, 2011. Photographer: SeongJoon Cho/Bloomberg

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(Bloomberg) -- U.S. stocks rallied Thursday after retail behemoth Walmart Inc. reported its best sales growth in more than a decade and Chinese and American officials agreed to hold talks in an attempt to resolve the trade dispute between the two countries. The dollar fell with Treasuries, and gold and oil rose.

All major equity benchmarks were higher. The S&P 500 Index climbed, led by telephone and consumer staples shares, and the Dow Jones Industrial Average added almost 400 points, or 1.6 percent. Food retailers posted their best gain since November after Walmart, the top performing S&P 500 company, said grocery sales spurred its strong results.

“The consumer is in great shape, highlighted by Walmart results,” said Cliff Hodge, director of investments at Cornerstone Wealth in Charlotte, North Carolina. “The market is underestimating the strength in the U.S. economy in the second half of the year. Some announcements on trade, whether it’s with NAFTA, the EU and China, or all of the above, can be catalysts for the next leg higher.”

Chipmakers were the weakest group in the S&P 500 ahead of earnings reports from Nvidia Corp. and Applied Materials Inc., which are expected after the market closes. Mining stocks and commodities rebounded from Wednesday’s slide as silver and copper gained.

The possibility of a breakthrough in the U.S.-China trade fight helped shake off some of the elevated caution that’s infected markets, particularly in developing nations, over the past week as Turkey has plunged into a currency crisis.

Read more about the proposed U.S.-China meeting and its significance

“Positive news out of Washington last night of a possible resumption in trade talks with China has changed the tide of negative sentiment today,” Chris Zaccarelli, chief investment officer at Independence Advisor Alliance, wrote in a note.

The Turkish lira rallied for a third day after the country’s Treasury and Finance Minister Berat Albayrak said on an investor call that the government has ruled out capital controls and that reining in inflation and narrowing the current-account deficit are its policy priorities. But the currency pared some of its gains after U.S. Treasury Secretary Steven Mnuchin said Turkey would face more sanctions if the country didn’t release an American pastor who the Trump administration says is being illegally detained.

Elsewhere, the Stoxx Europe 600 rose for the first time in seven sessions. Asian equities were lower in the wake of the disappointing earnings report from tech giant Tencent Holdings Ltd. on Wednesday. The yuan got a boost from the news of possibly easing tensions with the U.S.

Emerging-market shares fell for the seventh straight session, putting the group inches from a bear market. In Hong Kong, currency interventions continued after its dollar fell to the weak end of a trading band.

Terminal users can read more in our Bloomberg Markets Live blog here.

Here are some key events coming up this week:

  • Nvidia Corp. and Applied Materials Inc. report earnings after the market closes Thursday.
  • Euro-area inflation data are due on Friday.

These are the main moves in markets:

Stocks

  • The S&P 500 rose 0.8 percent to 2,840.67, while the Dow Jones Industrial Average added 396 points, or 1.6 percent.
  • The Stoxx Europe 600 Index gained 0.6 percent, its first increase in seven sessions.
  • The MSCI ACWI Index climbed 0.6 percent.
  • The MSCI Emerging Market Index declined 0.2 percent.
  • The MSCI Asia Pacific Index slipped 0.5 percent to the lowest since September 2017.

Currencies

  • The Bloomberg Dollar Spot Index declined 0.2 percent.
  • The euro increased 0.3 percent to $1.1374.
  • The British pound climbed 0.2 percent to $1.2718.
  • The Japanese yen slid 0.2 percent to 110.92 per dollar.

Bonds

  • The yield on 10-year Treasuries rose one basis point to 2.8696 percent.
  • Germany’s 10-year yield increased two basis points to 0.32 percent.
  • Britain’s 10-year yield advanced two basis points to 1.24 percent.

Commodities

  • The Bloomberg Commodities Index gained 1 percent.
  • West Texas Intermediate crude added 0.7 percent to $65.49 a barrel.
  • Gold advanced 0.1 percent to $1,173.61 an ounce.

--With assistance from Todd White and Yakob Peterseil.

To contact the reporters on this story: Eric J. Weiner in New York at eweiner12@bloomberg.net;Olivia Schaber in New York at oschaber1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner

©2018 Bloomberg L.P.

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