By Amrith Ramkumar and Paul J. Davies 

U.S. stocks climbed Wednesday, advancing for the second consecutive session on hopes that thawing trade tensions will boost the outlook for the world economy.

The Dow Jones Industrial Average was recently up 122 points, or 0.5%, at 25654. The S&P 500 added 0.6%, moving 3.2% below its April 30 record. It remains up 14% for the year. The tech-laden Nasdaq Composite added 1%.

Stocks erased earlier declines after Treasury Secretary Steven Mnuchin said U.S. negotiators are likely to travel to Beijing soon and reports emerged that the Trump administration is putting off a final decision on whether to impose broad tariffs on automobile and auto-part imports.

Updates on global trade policy have swung markets in recent days, with stocks rising and falling on shifting bets about the U.S. and China eventually reaching an agreement. Many investors are broadly worried about higher tariffs crimping economic and profit growth, leading to an uptick in volatility so far this month.

Those jitters have also increased focus on economic data points as analysts attempt to gauge whether a growth slowdown overseas will spread to the U.S. Data Wednesday showed U.S. retail sales fell unexpectedly in April even before the U.S. raised tariffs on $200 billion worth of Chinese imports and Beijing said it would raise levies on $60 billion of U.S. goods in response. U.S. manufacturing output also fell in April, missing expectations.

Figures also showed Chinese industrial production, retail sales and fixed-asset investment all slowed in April, the latest mixed data point concerning analysts who are uncertain how much stimulus measures will spur activity in the world's second-largest economy.

"There is more of a sluggish growth environment in the cards," said Matt Miskin, market strategist at John Hancock Investments. "It looks like an inopportune time to have more trade-war headlines creep into the markets."

In one sign of heightened growth worries, bond yields slid with investors seeking safety in U.S. Treasurys. The yield on the benchmark 10-year U.S. Treasury note fell to 2.386%, according to Tradeweb, from 2.421% a day earlier. Bond yields fall as prices rise.

"Bonds and cash are the beloved asset classes right now," Mr. Miskin said. "That leaves equities in a position where they could have upside just because sentiment has come down."

Some analysts expect an eventual trade deal and Chinese stimulus measures to boost the outlook for global growth moving forward. The Shanghai Composite rose 1.9% Wednesday following an upbeat session in the U.S. a day earlier, and Hong Kong's Hang Seng and Japan's Nikkei Stock Average also climbed.

Sebastien Galy, senior macro strategist at Nordea Asset Management, said investors in China seemed to react to the weak economic data by assuming that the government would bring more economic stimulus measures, sending stocks higher. The buying, he thought, was driven mainly by those who had been underinvested in the early part of the year.

"What seems to be happening is that many had missed the rally since December and were waiting to buy on a dip," he said. "With such a psychology, a shock that should be sizable seems to fade faster."

Figures Wednesday showed Germany's economy expanded 0.4% in the first quarter, after Europe's largest economy narrowly avoided a recession late last year. Some analysts remain wary that a slowdown in business confidence around the world following the latest tariffs will hurt growth more in the future. The Stoxx Europe 600 edged up 0.5%.

Among individual stocks Wednesday, Macy's swung between gains and losses and was recently down 1.1% after the retailer posted stronger-than-expected sales growth in its latest quarter.

Investors will also parse coming earnings from Walmart and other sellers of consumer goods for possible clues about how the companies plan to handle 25% tariffs on more than $40 billion of goods that are imported from China and directly purchased by U.S. consumers.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

May 15, 2019 12:46 ET (16:46 GMT)