FILE PHOTO: A view shows the New York Stock Exchange (NYSE) Wall Street entrance in New York City, U.S., April 7, 2025. REUTERS/Kylie Cooper/File Photo

By Kanchana Chakravarty and Sukriti Gupta

(Reuters) -Wall Street's main indexes were set to open higher on Monday as investors watched a fresh round of negotiations between the United States and China aimed at mending a trade rift that has rattled financial markets for much of the year.

Top officials from both countries have begun discussions at London's Lancaster House, a U.S. source said, as they look to address disagreements around a preliminary trade agreement struck last month that had briefly cooled tensions between the world's largest economies.

The meetings come four days after U.S. President Donald Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Trump's January 20 inauguration. The leaders had, however, left key issues unresolved for future talks.

"The talks will have to go on for some time before we decide whether or not there's actual progress being made, however, most investors remain hopeful that there will be some positive results," said Peter Andersen, founder at Andersen Capital Management.

White House economic adviser Kevin Hassett told CNBC in an interview on Monday the U.S. trade negotiators are seeking a handshake in London to seal an agreement struck by Trump and Xi to allow the export of China's rare earth minerals and magnets to the United States.

The benchmark S&P 500 closed above 6,000 on Friday for the first time since Feb. 21, following a better-than-expected jobs report and a rebound in Tesla's shares.

Hopes of more trade deals between the U.S. and its major trading partners, along with upbeat earnings and tame inflation data, helped U.S. equities rally in May, with the S&P 500 and the tech-heavy Nasdaq notching their best monthly gains since November 2023.

The S&P 500 remains a little over 2% below all-time highs touched in February, while the Nasdaq is about 3% below its record peaks reached in December.

Citigroup joined major brokerages in raising its year-end target for the S&P 500, citing renewed optimism in corporate earnings resilience and the accelerating momentum of artificial intelligence-driven growth. It sees the benchmark ending the year at 6,300, compared with 5,800 forecast previously, according to a note late on Friday.

Major data releases this week include readings on May consumer prices and initial jobless claims. While investors widely expect the Federal Reserve to keep interest rates unchanged next week, focus will be on any signs of pick-up in inflation as Trump's tariffs risk raising price pressures.

Traders currently expect 46 basis points of rate cuts by the end of 2025 and are pricing in a 55% chance of a 25 bps cut in September, according to data compiled by LSEG.

At 08:34 a.m. ET, Dow E-minis were up 46 points, or 0.11%, S&P 500 E-minis were up 9.5 points, or 0.16%, and Nasdaq 100 E-minis were up 19.25 points, or 0.09%.

Most megacap and growth stocks were mixed in premarket trading. Tesla shares fell 1.7% after a report said Baird downgraded the stock to "neutral" from "outperform".

Robinhood Markets fell 3.3% after the S&P 500 kept index constituents unchanged in its latest rebalancing, contrary to some analysts who had expected the online brokerage to join the benchmark index.

Warner Bros Discovery shares jumped 8.6% after the company said it would separate its studios and streaming business from its fading cable television networks.

Shares of Sunnova Energy slumped 28.4% after the company filed for Chapter 11 bankruptcy protection.

(Reporting by Kanchana Chakravarty and Sukriti Gupta in Bengaluru; Editing by Devika Syamnath)