US close: Stocks close higher on hopes of improving US-Sino relations

US stocks ended the session higher on Monday as investors awaited the outcome of the latest round of trade talks between the US and China.

At the close, the Dow Jones was 0.42% higher at 23,531.35, while the S&P 500 picked up 1.70% to 2,549.69 and the Nasdaq moved 1.26% firmer to 6,823.47.

While stocks managed to reverse losses seen at the bell, investors remained wary as officials from the US and China met in Beijing later for the first discussions between the two since Donald Trump and Xi Jinping agreed a temporary truce in December.

"These talks will have a positive outcome because both sides are trying to deal with the issue in an active and practical manner," said former vice commerce minister Wei Jianguo.

"“I'm not saying there could be positive results; I think there definitely will be."

On the macro front, activity in the US services sector deteriorated more than expected in December, according to data released on Monday.

The Institute for Supply Management's services index fell to a five-month low of 57.6 from 60.7 in November, missing expectations for a reading of 59.0.

The non-manufacturing business activity index slipped to 59.9 from 65.2 in November, reflecting growth for the 113th consecutive month.

The new orders index printed at 62.7 in December from 62.5 the month before, while the employment index fell to 56.3 from 58.4. The prices index came 57.6 compared from 64.3 in November.

Respondents indicated that there is still concern about tariffs, despite the hold on increases by the US and China. Also, comments reflected that capacity constraints have lessened but employment-resource challenges remain.

Meanwhile, the government shutdown entered its third week. Trump promised over the weekend to build his Mexico border wall out of steel as a compromise and repeated his threat that he may seek the necessary funding by declaring a state of emergency.

Elsewhere, West Texas Intermediate closed 1.46% higher at $48.66 a barrel, while Brent Crude improved 0.81% to $57.52.

The USD slipped 0.36% against the GBP to 0.7832.

In corporate news, Eli Lilly closed 0.54% lower after it said earlier that it had agreed to buy biopharmaceutical company Loxo Oncology for about $8bn in cash. The price represents a 68% premium to Loxo's closing share price on Friday. Loxo soared 66.33% in the session.

Utility operator PG&E Corp shares tumbled 22.34% following reports that the company is exploring a bankruptcy filing and asset sales and Sears sunk 9.30% after it was revealed that chairman Eddie Lampert's rescue bid had been unsuccessful.

Elsewhere, medical implant devices manufacturer Abiomed picked up 0.43% following the release of its third-quarter numbers and steel and metal manufacturer Commercial Metals closed 5.57% weaker after its first-quarter earnings.