The Dow Jones Industrial Average rose 200 points while the S&P 500 and Nasdaq Composite gained 0.8 percent and 0.7 percent, respectively.
Reuters reported that a Chinese official said "consensus is steadily increasing" in U.S.-China trade talks. The official added, according to the report, that differences between the two countries remained. The report sent stocks to their highs of the day, erasing earlier losses.
Jeff Powell, managing partner at Polaris Greystone Financial Group, said investors are taking a "wait-and-see approach" ahead of the meeting. "I don't think people are expecting too much of a change, but if we can get some sign of progress, that will help."
Trump and Xi are scheduled to have dinner on Saturday and are expected to discuss trade issues between the two countries. Investors are eagerly looking ahead to the dinner, hoping the two leaders can quell trade-induced volatility in the global economy and corporate earnings.
Nicolas Asfouri | AFP | Getty Images
U.S. President Donald Trump and China's President Xi Jinping leave a business leaders event at the Great Hall of the People in Beijing on November 9, 2017.
Caterpillar and Boeing rose 4.4 percent and 0.8 percent, respectively. These stocks are considered bellwethers for global trade because of their high exposure to foreign markets.
However, China hawk Peter Navarro, Trump's trade advisor, will attend the dinner between the two. Navarro is seen as a contentious figure in terms of Washington's trade relations with Beijing due to his aggressive stance on the world's second-largest economy. He clashed with White House economic advisor Larry Kudlow earlier this month after saying any deal with China would be "on President Donald J. Trump's terms, not Wall Street's terms."
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Heading into December, however, stocks could be in for more volatility, said Bruce Bittles, chief investment strategist at Baird.
"We do not have evidence that a meaningful cyclical low is in place, and the character of any rally attempts that do emerge will be watch closely," Bittles said in a note. He added, however, stocks have historically done well in December.
"December has a well-known history as being a strong month of the year for stocks," Bittles said. "In fact, it is the strongest month of the year for U.S. stocks on an absolute basis. Stocks have rallied over the course of the month about three quarters of the time."
The Dow is also on pace to register its biggest one-week gain since late 2016, while the S&P 500 is on track to post its largest weekly rise since February.
Shares of World Wrestling Entertainment traded 6.7 percent higher after J.P. Morgan Chase upgraded them to overweight from netural, noting the company's valuation is attractive compared to industry peers.
—CNBC's Ryan Browne contributed to this report.