U.S. stocks and government bond yields climbed Thursday as signs of progress in trade talks with China fueled investors’ appetite for risky assets.

The Dow Jones Industrial Average gained 242 points, or 0.9%, in early-afternoon trading. The S&P 500 advanced 0.5%, while the tech-heavy Nasdaq Composite was up 0.7%.

Stocks to Watch Thursday

All three indexes are trading at records, lifted by a resilient U.S. jobs market, a series of interest-rate cuts by the U.S. Federal Reserve, hopes that the trade spat with Beijing is easing and a strong corporate earnings season.

Following negotiations over the past two weeks, China and the U.S. agreed to remove tariffs at the same time and by the same amount when they sign the initial accord, a Chinese Commerce Ministry spokesman said Thursday. He described recent talks as “careful and constructive.”

The yield on 10-year Treasurys rose to 1.950% from 1.814% Wednesday, reaching levels last seen over the summer, as investors sold U.S. government debt, seen as a haven asset. Bond yields move in the opposite direction to prices.

Futures on gold, another haven, fell 1.8%. Meanwhile, U.S. crude oil futures jumped 2.3% on expectations that economic growth would drive energy demand.

“The economy is solid, with no sign of inflation, and geopolitical issues seem like they may be improving,” said Dan Miller, director of equities at GW&K Investment Management. “It just feels like everything is moving in the right direction.”

An employee sorts red-hot steel at a steel plant in China. Photo: str/Agence France-Presse/Getty Images

Still, major issues, such as intellectual-property protections for U.S. companies operating in China, still confront the U.S-Chinese trade negotiations. Much of the recent optimism has focused on a limited “phase one” trade deal, which would set aside some of the thornier issues in the two countries’ trade dispute.

Meanwhile, investors continued to parse quarterly earnings reports.

Shares of Qualcomm rose 7.5% after the chip maker signaled a strong year ahead for 5G phone sales.  Ralph Lauren jumped 13%, making it the best performer in the S&P 500, after the luxury fashion house’s quarterly results beat consensus expectations.

Among Thursday’s underperformers, Expedia tumbled 26% after the online travel company’s earnings missed analysts’ expectations. Roku, a maker of streaming-media devices that has been an investor darling this year, fell 11% after its quarterly loss nearly tripled from the year-ago period.

Later in the day, major U.S. corporations including The Wall Street Journal’s parent, News Corp. , as well as Walt Disney, will report earnings.

Of the 430 companies in the S&P 500 that have reported earnings through Thursday, nearly three-quarters have beaten analyst expectations, according to Refinitiv.

Overseas, the benchmark Stoxx Europe 600 rose 0.4%. In Asia, the Hang Seng Index climbed 0.6% in its sixth consecutive session of gains, while the Shanghai Composite Index was little changed.

The British pound fell 0.3% against the dollar after Bank of England Governor Mark Carney hinted at a possible rate cut. The WSJ Dollar Index, which measures the U.S. dollar against a basket of currencies, ticked up 0.1%.

Beijing is giving Washington a concession in the trade talks: regulations that would level the playing field for foreign companies in China. But there are doubts about Beijing’s true commitment to opening its market. Photo: Johannes Eisele/AFP via Getty Images

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

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