U.S. stocks closed higher on Monday after China and the United States agreed to take measures to ease trade tensions and maintain close contact.

The Dow Jones Industrial Average increased 287.97 points, or 1.13 percent, to 25,826.43. The S&P 500 increased 30.20 points, or 1.09 percent, to 2,790.37. The Nasdaq Composite Index was up 110.98 points, or 1.51 percent, to 7,441.51.

During a working dinner held on Saturday in Buenos Aires, Argentina, leaders of the two countries had positive and constructive discussions over trade and economic issues and agreed not to impose additional tariffs.

Shares of Boeing and Caterpillar, companies with high overseas revenue exposure, rose 3.81 percent and 2.42 percent respectively.

Stock prices of chip makers that have operations in China and a large amount of their sales in the country also increased, with Advanced Micro Devices and Nvidia surging 11.31 percent and 4.04 percent respectively.

On the economic front, U.S. manufacturing activity rose more than anticipated in November but construction spending was worse than expected, falling for the third straight month.

The ISM manufacturing PMI index registered 59.3 percent in November, better than the October reading of 57.7 percent.

U.S. construction spending fell for the third straight month in October to 1.31 trillion U.S. dollars as outlays on private projects declined, according to the Commerce Department on Monday.