Washington and Beijing are deadlocked in talks over USA complaints about China's trade surplus and industrial plans, which its trading partners say are based on stealing or pressuring companies to hand over technology.
By midday, the Dow Jones Industrial Average was trading 350 points higher, or 1.4 percent.
The S&P 500 on Friday edged up 1.88 points, or 0.1 percent, to 2,926.46, jumping 2.8 percent from a close of 2,847.11 on August 23. While a basket of upbeat comments reviving hopes of face-to-face trade talks despite tariffs on each other's product, a senior portfolio manager at Globalt Investment in Atlanta, Thomas Martin said, "It sounds to me like more of a continued slow-walking".
On the economic front, personal consumption expenditures (PCE), a key measure of USA household spending, rose 0.6 per cent to 93.1 billion United States dollars in July, boosted by spending in recreational goods and vehicle, as well as household electricity and gas, the Bureau of Economic Analysis reported on Friday. President Donald Trump then announced he would raise tariffs on a slew of Chinese goods starting in September.
While the S&P 500 registered its biggest weekly gain since June, August had its biggest monthly decline since May.
A total of four inversions of the yield curve has anxious investors this month, raising fears of a recession.
Bond prices rose. The yield on the 10-year Treasury fell to 1.50%. Meanwhile, the rate on the benchmark 30-year Treasury bond sank to an all-time low.
The Consumer Discretionary sector was the S&P's biggest drag as Ulta Beauty, which had been the S&P's top performing stock in Wall Street's decade-old bull market, tumbled 29.6 per cent after the cosmetics company cut its full-year profit forecast.
Advancing issues outnumbered declining ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favoured advancers.
The S&P 500 gained 79.35 points, or 2.8%.
Mr Trump also lashed out of at "badly run and weak companies", saying they were blaming their problems on the tariffs.
The S&P 500 is up 417.73 points, or 16.7%.
The Trump administration on Wednesday made official its additional 5% tariff on $300 billion in Chinese imports and set collection dates of September 1 and December 15, prompting several hundreds of U.S. companies to warn of price hikes.
Dell Technologies Inc DELL.N jumped 8.4% as the PC maker beat analysts' estimates for profit, aided by higher demand for desktops as well as a focus on more profitable contracts within its server unit in China. Heating oil climbed 1 cent to $1.86 per gallon.
Shares of Apple and Boeing, both exposed to the Chinese market, both rose about one per cent on the news.
The S&P index recorded 20 new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 12 new lows.