Investing.com -- The S&P 500 climbed 1.6%, extending its earlier gains as investors reacted positively to the latest developments in trade negotiations between the United States and China. The latest upswing in sentiment was primarily driven by reports that Beijing is actively considering measures to address concerns raised by the Trump administration regarding China’s involvement in the fentanyl trade, a contentious issue that has contributed to trade tensions between the two nations.

This conciliatory move by China suggests a potential de-escalation of the ongoing trade war, which has seen both countries impose significant tariffs on each other’s goods, leading to increased economic strain. The Wall Street Journal noted that Chinese public security minister Wang Xiaohong has been seeking clarity on what the U.S. expects from China in terms of regulating fentanyl precursors. These chemicals, produced in large quantities by Chinese firms, have been linked to illegal fentanyl production and trafficking, particularly affecting the U.S.

The discussions are still in a state of flux, but there is a possibility that Wang could travel to the U.S. or meet with American officials in a third country to advance these talks. Beijing’s willingness to engage is seen as a response to the economic challenges it faces, including a property crisis, deflationary pressures, and faltering consumer and business confidence.

In a notable shift, China’s Commerce Ministry earlier expressed a readiness to initiate dialogue to end the trade war, asking for the Trump administration to demonstrate sincerity in its approach. This change in stance comes after the ministry had previously insisted on the U.S. reducing its tariffs as a precondition for negotiations.

The S&P 500’s rise to near 5,700 points was further bolstered by positive economic data, including a better-than-expected increase in nonfarm payrolls for April and a steady unemployment rate of 4.2%.