U.S. stocks drift and Chinese markets rise as trade talks start between the world’s largest economies

NEW YORK — U.S. stocks drifted through a quiet Monday as the world’s two largest economies began talks on trade that could help avoid a recession.

The Standard & Poor’s 500 index edged up by 0.1% and is within 2.3% of its record, which was set in February. The Dow Jones industrial average slipped by 1 point, which is well below 0.1%, and the Nasdaq composite added 0.3%.

Officials from the United States and China met in London to talk about a range of different disputes that are separating them. The hope is that they eventually can reach a deal that will lower each’s punishing level of tariffs against the other, which are currently on pause, so that the flow of everything from tiny tech gadgets to enormous machinery can continue.

Hopes that President Trump will lower his tariffs after reaching such trade deals with countries around the world have been among the main reasons the S&P 500 has rallied so furiously since dropping roughly 20% from its record two months ago. It’s back above where it was when Trump shocked financial markets in April with his wide-ranging tariff announcement on what he called “Liberation Day.”

This may be the shortest sell-off after a shock of heightened volatility on record, according to Parag Thatte, Binky Chadha and other strategists at Deutsche Bank. Typically, stocks take about two months to bottom after a surge in volatility and then four to five more months to recover their losses. This time, stocks have basically made a round trip in less than two months.

But nothing is assured, of course, and that helped keep trading relatively quiet Monday on Wall Street.

Some of the market’s biggest moves came from the announcement of big buyout deals. Qualcomm rallied 4.1% after saying it agreed to buy Alphawave Semi in a deal valued at $2.4 billion. IonQ, meanwhile, rose 2.7% after the quantum computing and networking company said it agreed to purchase Oxford Ionics for nearly $1.08 billion.

On the losing side of Wall Street was Warner Bros. Discovery, which flipped from a big early gain to a loss of 3% after saying it would split into two companies. One will get Warner Bros. Television, HBO Max and other studio brands, while the other will hold on to CNN, TNT Sports and other entertainment, sports and news television brands around the world, along with some digital products.

Tesla recovered some of its sharp, recent drop. The electric-vehicle company tumbled last week as Elon Musk’s relationship with Trump broke apart, and it rose 4.6% on Monday after flipping between gains and losses earlier in the day.

The frayed relationship could end up damaging Musk’s other companies that get contracts from the U.S. government, such as SpaceX. Rocket Lab, a space company that could pick up business at SpaceX’s expense, rose 2.5%.

All told, the S&P 500 rose 5.52 points to 6,005.88. The Dow slipped 1.11 points to 42,761.76, and the Nasdaq composite rose 61.28 points to 19,591.24.

In stock markets abroad, indexes were modestly lower in Europe after rising across much of Asia.

Chinese markets climbed even though the government reported that exports slowed in May, growing 4.8% from a year earlier after jumping more than 8% in April. China also reported that consumer prices fell 0.1% in May from a year earlier, marking the fourth consecutive month of deflation.

Stocks rallied 1.6% in Hong Kong and rose 0.4% in Shanghai.

In the bond market, the yield on the 10-year Treasury eased to 4.48% from 4.51% late Friday. It fell after a survey by the Federal Reserve Bank of New York found that consumers’ expectations for coming inflation eased a bit in May.

That provides some relief for the Fed, which has been keeping its main interest rate steady as it waits to see how much Trump’s tariffs will raise inflation and how much they will hurt the economy. A persistent increase in expectations for inflation among U.S. households could drive behavior that creates a vicious cycle that only worsens inflation.

Economists expect a report coming Wednesday to show that inflation across the country accelerated last month to 2.5% from 2.3%.

Choe writes for the Associated Press.