Days after back-to-back retaliatory tariffs brought the U.S.-China trade war to a boiling point, officials on both sides tamped down the rhetoric Thursday and signaled they were looking for an exit ramp.

The cool-down lifted Wall Street, powering the three major indexes to healthy gains, after Beijing said it wasn’t looking to escalate the trade war. China confirmed that a face-to-face meeting in September was still on the table.

“China has ample means for retaliation, but we think the question that should be discussed now is about removing the $550 billion of new tariffs to prevent escalation of the trade war,” Commerce Ministry spokesman Gao Feng told reporters Thursday in Beijing.

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“The most important thing is to create the necessary conditions for continuing negotiations.”

China’s change in tone mirrored one Trump presented during the Group of Seven summit, when he said there had been two “very good” calls with China after negotiators reached out and expressed interest in a deal. (Gao did not confirm Trump’s claim that China had called U.S. officials over the weekend in pursuit of a deal.) On Thursday, he told Fox News Radio that negotiators had a talk scheduled that day “at a different level.” However, he did not offer any details or say what he hoped the call would accomplish.

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The year-long standoff took a bleak turn last Friday after Beijing introduced retaliatory tariffs on $75 billion in goods and said it would reinstate levies on auto products. Trump, in turn, raised the rates of existing and planned tariffs and called Chinese President Xi Jinping an “enemy.” He also demanded that American businesses cut ties with China.

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The trade blows renewed fears of an economic slowdown and sent stocks into a tailspin. The Dow Jones industrial average sank more 623 points, or nearly 2.4 percent, while the Standard & Poor’s 500 fell 2.6 percent and the Nasdaq composite erased 3 percent.

But Thursday’s exchange suggested there was at least some willingness on both sides to work toward a resolution, especially after Beijing said that discussions for a September meeting were ongoing. Chinese negotiators had been expected to travel to the United States for those talks until last week’s pandemonium raised doubts.

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That was enough to give weary investors some measure of hope, said Ed Yardeni, president of Yardeni Research.

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“China saying that negotiations are continuing over trade talks is bullish for investors,” Yardeni said Thursday. “Investors just want this issue resolved. The Chinese have said this before, but it beats the alternative of having China say they are not interested in pursuing any further talks.”

All three indexes had a good day Thursday, but remain down about 2 percent with one trading day left in the month. August is historically one of the worst months for stock performance.

The Dow closed Thursday at 26,362, 326-point gain, or 1.25 percent. China-exposed heavyweights like Apple, Nike, Intel and Caterpillar helped lead the way. All but four of the 30 blue chips were positive Thursday. The Dow is on pace for its best week since June.

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The S&P 500 finished at 2,924, a 1.27 percent gain of 36 points. All 11 stock market sectors were positive Thursday, with information technology, industrials and energy at the top. Oil prices rose 1.7 percent on news from the U.S. Energy Information Administration that crude oil stock reserves had fallen last week.

The tech-laden Nasdaq raced 116 points ahead, a 1.5 percent gain to close at 7,973.

“China’s stated preference for a negotiated solution rather than reciprocating the latest tariff increases is being taken as a meaningful de-escalation,” Brendan Walsh, an analyst with Markets Policy Partners, wrote in a note to investors Thursday. “Investors’ overriding concern is that Beijing walks away from the negotiation due to overuse of pressure tactics by the White House. Next month’s Chinese trade delegation to Washington is being seen by market participants as a potentially pivotal event.”

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Recession fears have spiked in recent weeks as a raft of warning signals have surfaced in the U.S. economy. The nation’s manufacturing sector has contracted for the first time in a decade, and sales of U.S. exports have decreased at the fastest pace since 2009. For the first time since the run-up to the Great Recession, the yields — or returns — on short-term U.S. bonds eclipsed those of long-term bonds. The phenomenon, known as an inverted yield curve, has preceded every recession since 1955 and signals that investors are piling into safer assets.

On Thursday, the U.S. Commerce Department said the U.S. economic growth had slowed more in the second quarter than previously thought. Gross domestic product grew at an annualized rate of 2 percent, the department said, revised down from an estimate of 2.1 percent last month.

“Consumers bought more non-durable goods and spent more on services, but exports were a touch weaker and spending by state & local governments added less than the first GDP estimate a month ago,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in note to investors Thursday. “The economy is still on cruise control and growing a steady 2.0% in the second quarter as the trade wind skies continue to darken.”

Just as the trade war takes its toll on the U.S. economy, the conflict’s effects are also rippling across the globe. China’s economic growth has slowed to its lowest rate in 27 years, as factory output declines and unemployment rises, and central bank leaders in Europe, Asia and Australia have cut interest rates in recent weeks, citing the need for economic stimulus.

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