Investor sentiment received a boost as US stocks tested all-time highs following President Donald Trump's announcement that Chinese President Xi Jinping reached out to him before Inauguration Day. This development suggests a potential thaw in US-China trade relations, which could lead to compliance with Trump's trade demands. The anticipation of improved trade relations has reduced geopolitical risks, encouraging investment in equities and driving stock valuations higher.
The potential for reduced trade barriers is expected to enhance corporate profits, further fueling market optimism. While the threat of a 10% levy on China by February 1 looms, the possibility of resolving trade tensions favorably has bolstered investor confidence. As of 12:11 on January 23, the S&P 500 Index was trading at 6,094.92, slightly up from its last close of 6,086.37, and nearing its intraday high of 6,099.88.