Wall Street surges as trade war fears cool; Dow up 1.7%, Nasdaq rises 2%

All the 11 major S&P indexes were up, led by a 2.4 percent gain in technology and financial indexes. Gainers on the New York Stock Exchange outnumbered losers for a 9.30-to-1 ratio and for a 7.39-to-1 ratio on the Nasdaq.

The United States asked China in a letter last week to slash tariffs on US autos, buy more US-made semiconductors and give US firms greater access to the Chinese financial sector, the Wall Street Journal reported on Monday.

Chinese Premier Li Keqiang said on Monday the country would treat foreign and domestic firms equally, not force foreign firms to transfer technology and would strengthen intellectual property rights, repeating promises that have failed to placate Washington.

Stock markets were gripped by fears of a global trade war after President Donald Trump last week moved to impose tariffs on Chinese imports of up to $60 billion, adding to the import restrictions he has already placed on solar panels, steel and aluminium among others.

"There are some tentative signs that fears of an escalation of trade tensions are beginning to ease," Craig Erlam, a market analyst at OANDA, wrote in a note to clients.

"A rebound in global equities overnight is offering the market some optimism of stabilization after last week's rout."

At 9:34 a.m. ET, the Dow Jones Industrial Average was up 1.73 percent at 23,939.32. The S&P 500 gained 1.66 percent to 2,631.14 and the Nasdaq Composite rose more than 2 percent to 7,134.25.

Microsoft jumped 6 percent and was the biggest driver of the three main indexes. Morgan Stanley raised its price target on Microsoft's stock, saying the software company could hit $1 trillion in market value with growing public adoption of the cloud and improving margins.

Shares of Boeing and United Technologies were up about 2.8 percent. Along with other industrial stocks, they have taken a beating in the wake of Trump's tariffs plans due to their exposure to China.

Last week, the three main US indexes posted their steepest weekly declines since January 2016 as the fears of a global trade war added to jitters about a faster pace of US interest rate hikes and fears of increased regulations to the high-flying technology sector in the wake of Facebook's data scandal.

Facebook fell 1.4 percent, after losing $75 billion last week amid outcry over the social media company's handling of users' data.

Intel gained more than 3.4 percent after brokerage Raymond James upgraded the stock to "market perform".