Investors are cautiously optimistic ahead of U.S.-China trade talks, hoping for lower tariffs on Chinese imports and concessions on rare earth exports. Stock markets soared on Monday in anticipation of a deal between Trump and Xi, with the S&P 500 hitting a record high.

Despite excitement, investors are wary of Trump’s trade tactics, following a familiar pattern of threats and eventual negotiations. Chinese stocks have been rising in anticipation of the talks, but history shows negotiations can break down, leading to skepticism in the market.

While investors anticipate positive outcomes from the trade talks, there are downside risks to consider. The Federal Reserve may cut rates, but disappointing earnings or a negative outcome from the Trump-Xi meeting could offset any optimism. The market is bracing for potential letdowns, given past negotiations breaking down.

Read more at Yahoo Finance: Analysis-As Trump-Xi trade talks near, investors turn to history as a guide