By John Towfighi, CNN

New York (CNN) — Wall Street this week cautiously rallied, betting President Donald Trump might take a softer tone on his trade war. Investors on Friday got their wish as the president said the next round of US-China trade talks is set to take place on Monday.

The S&P 500 on Friday closed at its highest level since February.

Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer will meet in London with representatives of China, Trump said on social media.

The Dow closed higher by 443 points, or 1.05%. The broader S&P 500 rose 1.03% and the tech-heavy Nasdaq Composite gained 1.2%. The three major indexes were largely unchanged after Trump’s post but glided into a strong close for the week.

The Dow, S&P 500 and Nasdaq all posted back-to-back weeks of gains.

“The meeting should go very well,” Trump said in his post. The announcement comes amid a punishing tariff war between the world’s two largest economies as Trump works to rebalance what he considers unfair trade between the US and its global partners. Trump and his Chinese counterpart Xi Jinping spoke for 90 minutes on Thursday. After Trump’s call with Xi, the US president said he was encouraged that ongoing trade tensions could soon be resolved.

“While there is still uncertainty over tariffs, the stock market is forward looking and has been pricing in an eventual thawing of trade fears,” said Glen Smith, CIO at GDS Wealth Management. “It’s becoming clear that the rhetoric on tariffs is much tougher than the action.”

Jobs data, Tesla rebound boost markets

Stock futures had jumped higher on Friday after a slightly better-than-expected jobs report soothed nerves about how the US economy has been holding up during the early stages of Trump’s tariff regime.

Data from the Labor Department showed the economy added 139,000 jobs last month, which was a slowdown from the month prior but better than anticipated.

Wall Street has been looking for any sign of relief that the economy might be muddling through the uncertainty stoked by Trump’s tariffs. Data from payroll company ADP on Wednesday showed an unexpected drop-off in private-sector hiring, though Friday’s Labor Department data helped assuage concerns about the economy.

“While job growth decelerated in May, the payroll data came in above expectations and it is extremely encouraging to see a six-figure print during a time of significant uncertainty driven by tariffs and economic fears,” Smith said.

Yet uncertainty lingers about how Trump’s tariff policy might impact economic growth and business activity in the coming months. It will likely be a few months before the full impact of tariffs on business decisions, hiring and inflation show up in the economic data.

“The deleterious impacts of uncertain tariff policies have yet to be fully reflected in the jobs data,” said Steve Wyett, chief investment strategist at BOK Financial.

Stocks leading the rebound included Tesla (TSLA), which rose 3.67% after an enormous drop the day prior. Tesla on Thursday plummeted 14% after Trump and CEO Elon Musk, who recently stepped aside from his role leading the Department of Government Efficiency, traded barbs on social media.

Thursday’s slide wiped roughly $152 million off of Tesla’s market value, which was the biggest single-day drop in value in the company’s history.

After Friday’s slight recovery, Tesla’s market value is still down about $119 billion across the past two days.

Trump on Friday told CNN’s Dana Bash that he’s “not even thinking about Elon” and won’t speak to him “for a while.”

“He’s got a problem,” the president said. “The poor guy’s got a problem.”

Wall Street expects fewer rate cuts this year

Bond yields rose on Friday as traders dialed back their expectations for rate cuts from the Federal Reserve this year. A resilient labor market gives the Fed more time to hold rates steady.

The odds the Fed cuts rates in July fell to 16% from 30% one day ago, according to the CME FedWatch tool. Traders expect the next potential rate cut will come in September.

“We remain comfortable with our view that the Fed won’t cut this year,” analysts at Bank of America said in a Friday note.

The yield on the 10-year US Treasury rose to 4.51% and the yield on the 30-year US Treasury rose to 4.97%. Bond yields and prices trade in opposite directions.

“The Fed should be reluctant to cut rates because the full effects of tariffs haven’t impacted inflation numbers yet and the job market isn’t deteriorating enough to force their hand,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

Eyes turn to US-China trade talks

Investors in recent weeks have increasingly embraced the “TACO” trade, betting that “Trump always chickens out” on his most aggressive tariff threats.

Wall Street will be attuned to the meeting between US and Chinese representatives on Monday. The scheduled talks come after Trump and Xi this week held a long-awaited call. There have been weeks of simmering tensions between Washington and Beijing.

Trump separately hiked tariffs on steel and aluminum imports to 50% from 25%, which went into effect on Wednesday. Wall Street had largely expected the tariffs, and rallied despite their implementation.

“There are no signs of a summer break from tariff drama,” analysts at JPMorgan Chase said in a Tuesday note.

US stocks are coming off their best monthly gain since November 2023 as Wall Street has steadily climbed out of the hole caused by Trump’s tariff uncertainty. The S&P 500 is up about 1.5% so far this month.

“Both budget and tariff negotiations are likely to remain front and center,” analysts at Citi said in a Friday note. “Of course, we’ll need to keep an eye out for further policy curveballs.”

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CNN’s Samantha Waldenberg contributed reporting.