The Dow Jones was up 326 points or 1.2 percent at 26,362. The S&P 500 rose about 1.3 percent to 2,924, while the Nasdaq added 1.5 percent to 7,973.
The rally nevertheless left stocks on track to finish the month in the red for the first time since May.
The gains came following China’s Commerce Ministry statement that rather than retaliation, the next agenda item in the trade war should be cancelling President Donald Trump’s latest round of tariffs, and that escalation was “not beneficial” for either side.
Maris Ogg of Tower Bridge Advisers said: “People are holding out hope,” although that optimism may prove short lived.
“If the trade wars go away or dissipates, clearly you have a healthier economic environment,” she said. “But you need some concrete actions for this to have long term impact.”
Among individual companies, trade-sensitive stocks such as Apple, Boeing and Microsoft all rose.
But corporate earnings from retailers Best Buy, Abercrombie & Fitch and Dollar Tree all contained fresh warnings that new tariffs will be a direct threat to profits.
Despite posting better-than-expected quarterly earnings on Thursday, electronics retailer Best Buy plunged eight percent.
Shares in US tobacco maker Altria fell 3.5 percent, a day after Philip Morris International announced the two companies were contemplating a merger.
The Wall Street Journal reported on Thursday that the Federal Trade Commission was investigating potentially deceptive marketing practices by the e-cigarette maker JUUL, in which Altria maintains a significant stake. (AFP)