Stocks Open Modestly Higher as Trump, Xi Speak Amid Rising U.S.-China Tensions

U.S. stocks edged higher at the open Thursday as investors weighed a rare direct conversation between President Donald Trump and Chinese President Xi Jinping, which comes amid escalating trade and technology disputes between the two global powers.

The Dow Jones Industrial Average rose 61.79 points, or 0.15%, to 42,489.5 in early trading. The Nasdaq Composite climbed 68.21 points, or 0.35%, to 19,528.7, while the S&P 500 gained 15.54 points, or 0.26%, to 5,986.35. The Russell 2000 was flat at 208.44. However the major indexes fell into negative territory within twenty minutes of the start of trading.

Market attention quickly shifted from economic fundamentals to geopolitics after Chinese state media outlet Xinhua reported that Trump and Xi held a phone call earlier in the day. According to Beijing’s Ministry of Foreign Affairs, the call was initiated by Trump and marks the first direct conversation between the two leaders in recent months.

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The timing of the call is notable as tensions over critical technology exports and rare earth metals intensify. The U.S. has accused China of backtracking on commitments to ease restrictions on rare earth exports—essential inputs for electronics and defense systems. In response, China has expressed frustration over new American limitations on chip design software and threats to revoke visas for Chinese students studying in the U.S..

Trump has repeatedly argued that only direct engagement with Xi could resolve long-standing disputes. Until now, Xi has avoided such overtures, delegating talks to advisors instead. The call signals a potential shift in diplomatic tone even as friction remains high.

Beyond geopolitics, investors are also digesting the debut of Circle, the issuer of the stablecoin USDC, on the New York Stock Exchange under the ticker "CRCL" The crypto firm priced its IPO at $31 per share—well above expectations—giving it a valuation of $6.2 billion. The offering raised $6.2 billion through the sale of roughly 34 million shares, expanding significantly from the originally planned 24 million.

Circle's public debut is being closely watched as a test case for crypto firms seeking regulatory legitimacy and broader market access. It follows eToro's successful IPO last month, and comes as U.S. regulators consider new rules for stablecoins that could bolster confidence in such digital assets.

Meanwhile, fiscal policy remains a source of uncertainty. President Trump has proposed eliminating the U.S. debt ceiling entirely, a controversial move that unexpectedly aligns him with Senator Elizabeth Warren. Both argue that the limit creates avoidable economic crises. The idea faces opposition from some fiscal conservatives and technocrats warning of unchecked government borrowing.

At the same time, Elon Musk has launched a public campaign against Trump’s proposed tax overhaul, citing concerns over a projected $2.4 trillion increase to the national debt and the removal of the electric vehicle tax credit—a critical issue for Tesla. Musk has called the legislation a “disgusting abomination” and urged Americans to contact lawmakers in opposition.

As markets opened, investor sentiment appeared cautiously optimistic, bolstered by easing international communication and high-profile corporate listings. Still, volatility may increase as traders monitor developments from the White House, including a scheduled 11:45 AM meeting between Trump and newly inaugurated German Chancellor Friedrich Merz