(Reuters) – The S&P 500 ended higher on Tuesday, lifted by a rally in Tesla as investors bet on positive results from U.S.-China trade talks aimed at defusing a tariff dispute that has roiled global markets this year.

Wall Street expects improved trade terms after relief from a preliminary deal struck last month was overshadowed by Washington’s allegations that Beijing was blocking exports of rare earth minerals critical to the aerospace, semiconductor and defense sectors.

U.S. Commerce Secretary Howard Lutnick said the trade talks were going well and he hoped they would end on Tuesday night, but said they could run into Wednesday.

US Stock Market Surged in Recent Weeks

The U.S. stock market has surged in recent weeks, recovering from an April slump sparked by U.S. President Donald Trump’s “Liberation Day” sweeping global tariffs.

With investors betting the United States will reach trade agreements that reduce Trump’s steep trade barriers, the S&P 500 is now trading just below its February record highs.

“The expectation is that they’ll figure this out, and that the Liberation Day tariff levels are never going to be seen. You can’t get to market valuations where we’ve got them and have those tariff levels get anywhere close to reality,” said Scott Ladner, chief investment officer at Horizon Investments.

Wall Street Shows Tesla Rose, Microsoft Dipped

Shares of Wall Street’s most valuable companies were mixed. Tesla rose while Microsoft slipped.

Alphabet climbed after Reuters reported that OpenAI plans to add Alphabet’s Google cloud service to meet its growing needs for computing capacity.

According to preliminary data, the S&P 500 gained 33.95 points, or 0.57%, to end at 6,039.83 points, while the Nasdaq Composite gained 125.00 points, or 0.64%, to 19,717.33. The Dow Jones Industrial Average rose 119.44 points, or 0.28%, to 42,881.20.

Investors are awaiting U.S. consumer prices data on Wednesday for clues to the Federal Reserve’s rate trajectory.

The World Bank slashed its global growth forecast for 2025 by 0.4 percentage point to 2.3%, saying higher tariffs and heightened uncertainty posed a “significant headwind” for nearly all economies.

Insmed shares jumped after the drugmaker said its experimental drug significantly reduced blood pressure in the lungs and improved exercise capacity in patients in a mid-stage study.

J.M. Smucker’s shares tumbled after the Jif peanut butter maker forecast annual profit below estimates.

Snap bounced between gains and losses after the social media platform said it would launch its first-ever smart glasses for all consumers next year, ratcheting up competition with Meta in the wearable technology market.

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(Reporting by Kanchana Chakravarty and Sukriti Gupta in Bengaluru, and by Noel Randewich in San Francisco; Additional reporting by Purvi Agarwal; Editing by Devika Syamnath, Pooja Desai and Aurora Ellis)