Paul Davidson | USA TODAY

USA TODAY

Stocks surged within a whisker of a record high Tuesday after President Trump tweeted of his plans to hold an “extended meeting” with Chinese President Xi Jinping later this month and the head of the European Central Bank said another rate cut may be on the way.

“Had a very good telephone conversation with President Xi of China,” Trump tweeted Tuesday morning. “We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting."

Chris Zaccarelli, chief investment officer of Independent Advisor Alliance, says "That's a big change in tone from just a few days earlier," when any agreement seemed highly unlikely.

The U.S. is set to impose a 25% tariff on the remaining $300 billion in Chinese imports not already hit with duties if the two countries don’t reach at least a tentative deal that scraps or shelves the tax. Investors view a Trump-Xi meeting as the last best hope for some type of détente in the escalating trade fight.

The Trump administration already has slapped a 25% tariff on $250 billion in shipments from China. But the proposed new levy would directly hit consumer goods, such as toys, clothing and electronics.

The Standard & Poor’s 500 index rose 28 points, or about 1%, to 2,917, within 1% of its record close April 30. The Dow Jones industrial average closed up 353 points, or 1.4% to 26,465 after surging as much as 415 points earlier in the day. And the tech heavy NASDAQ climbed 109 points, or 1.4%, to 7,954.

Stocks were already moving higher on European Central Bank President Mario Draghi’s remarks Tuesday that policymakers were prepared to cut interest rates to jolt a sluggish economy and weak inflation.

Alex Brandon, AP

Markets have perked up since U.S. Federal Reserve Chairman Jerome Powell early this month suggested Fed officials were prepared to lower rates to sustain the expansion amid the U.S. trade battle with China. Although no rate cut is expected at a two-day meeting that concludes Wednesday, the Fed is expected to signal it could trim rates as soon as a late July meeting.