US stocks have closed more than one per cent higher, but well off the day’s highs after the announcement of a partial trade deal between the US and China. Indexes cut their gains late in the session as the deal was announced amid worries over potential glitches in the agreement, strategists said.

President Donald Trump said the US and China had come to a substantial phase-1 trade deal, reaching agreement on intellectual property, financial services and big agricultural purchases. Trump, who was speaking to reporters after talks with Chinese Vice Premier Liu He, also said the two countries are close to ending their trade war. The market had risen sharply earlier in the day due to optimism for an agreement. Top-level talks between the two countries concluded their second day on Friday.

Cyclicals were among the day’s best-performing groups, with the S&P industrial index up about 2 per cent ahead of the third-quarter earnings season, which is set to begin next week. The Dow Jones Industrial Average rose 319.92 points, or 1.21 per cent, to 26,816.59, the S&P 500 gained 32.14 points, or 1.09 per cent, to 2,970.27 and the Nasdaq Composite added 106.27 points, or 1.34 per cent, to 8,057.04.

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