NEW YORK (AFP) - Wall Street stocks finished solidly higher for a second straight session on Friday (Aug 17) on hopes of a breakthrough in US-China trade talks.

The Dow Jones Industrial Average climbed 0.4 per cent to 25,669.32.

The broad-based S&P 500 advanced 0.3 per cent to 2,850.13, while the tech-rich Nasdaq Composite Index added 0.1 per cent at 7,816.33.

Major indices spent much of the morning in the red on the latest back-and-forth in a diplomatic spat between the United States and Turkey.

But markets rallied following a midday Wall Street Journal report that Washington and Beijing were taking steps to try to resolve a trade dispute ahead of a November summit between US President Donald Trump and Chinese leader Xi Jinping.

The article added to positive sentiment after both sides on Thursday confirmed a resumption of talks, even though both parties are still expected to enact fresh tariffs next week.

"Clearly the market rallied after that Wall Street Journal report," said Karl Haeling of LBBW. "At the same time though, the market did not rally that much."

"The lack of details prevented a bigger rally," he added.

"There's still a lot of uncertainty about what all this means."

Tesla Motors slumped 8.9 per cent on continued fallout from chief executive Elon Musk's efforts to take the electric automaker private.

In an interview with The New York Times, Musk acknowledged exhaustion from overwork as regulators probe his statements about the plan on Twitter.

Nordstrom surged 13.3 per cent after raising its full-year forecast following a four percent jump in comparable sales in the second quarter. Analysts viewed the results as better than those of Macy's and some other department stores.

Deere & Co added 2.4 per cent after projecting that agricultural equipment sales would rise 30 per cent in 2018.

"Replacement demand for large agricultural equipment is driving sales even in the face of tensions over global trade and other geopolitical issues," said chief executive Samuel Allen.