US stocks drift and Chinese markets rise as trade talks start between the world's largest economies

NEW YORK (AP) — 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 S&P 500 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 can eventually 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 Donald 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 following a shock of heightened volatility on record, according to Parag Thatte, Binky Chadha and other strategists at Deutsche Bank. Typically, stocks take around two months to bottom following a spike in volatility and then another four to five months to recover their losses. This time around, 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 on Wall Street Monday.

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 onto 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% 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 Jones Industrial Average slipped 1.11 to 42,761.76, and the Nasdaq composite rose 61.28 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 on Wednesday to show inflation across the country accelerated last month to 2.5% from 2.3%.

AP Writer Jiang Junzhe contributed.

Joseph Armes, Chairman, President & CEO of CSW Industrials, gavels trading closed at the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

President of the European Parliament Roberta Metsola, from Malta, left, meets with specialist Meric Greenbaum during her visit to the trading floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Trader James Lamb works on the floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Trader Richard Cohen works on the floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Trader David Fox, right, and specialist Anthony Matesic work on the floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Trader Edward Curran works on the floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Traders Dylan Halvorsan, left, and Drew Cohen work on the floor of the New York Stock Exchange, Monday, June 9, 2025. (AP Photo/Richard Drew)

Trader Jonathan Mueller works on the floor of the New York Stock Exchange, Thursday, June 5, 2025. (AP Photo/Richard Drew)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, June 9, 2025. (AP Photo/Ahn Young-joon)

A currency trader watches monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, June 9, 2025. (AP Photo/Ahn Young-joon)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won, center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, June 9, 2025. (AP Photo/Ahn Young-joon)

A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, June 6, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)

Iran eased some restrictions on its people and, for the first time in days, allowed them to make phone calls abroad via their mobile phones on Tuesday. It did not ease restrictions on the internet or permit texting services to be restored as the death toll from days of bloody protests against the state rose to at least 2,000 people, according to activists.

Although Iranians were able to call abroad, people outside the country could not call them, several people in the capital told The Associated Press.

The witnesses, who spoke on condition of anonymity for fear of reprisal, said SMS text messaging still was down and internet users inside Iran could not access anything abroad, although there were local connections to government-approved websites.

It was unclear if restrictions would ease further after authorities cut off all communications inside the country and to the outside world late Thursday.

Here is the latest:

The U.S.-based Human Rights Activists News Agency, which has been accurate in previous unrest in recent years, gave the latest death toll on Tuesday.

It said 1,847 of the dead were protesters and 135 were government-affiliated.

This came a day after the European Parliament announced it would ban Iranian diplomats and representatives.

“Iran does not seek enmity with the EU, but will reciprocate any restriction,” Foreign Minister Abbas Araghchi wrote on X on Tuesday.

He also criticized the European Parliament for not taking any significant action against Israel for the more than two-year war in Gaza that has killed more than 71,400 Palestinians, while banning Iranian diplomats after just “a few days of violent riots.”

Dutch Foreign Minister David van Weel said he summoned Iran’s ambassador to the Netherlands “to formally protest the excessive violence against peaceful protesters, large-scale arbitrary arrests, and internet shutdowns, calling for immediate restoration of internet access inside the Islamic Republic.

In a post on X, Weel also said the Dutch government supports EU sanctions against “human rights violators in Iran.”

The United Nations human rights chief is calling on Iranian authorities to immediately halt violence and repression against peaceful protesters, citing reports of hundreds killed and thousands arrested in a wave of demonstrations in recent weeks.

“The killing of peaceful demonstrators must stop, and the labelling of protesters as ‘terrorists’ to justify violence against them is unacceptable,” U.N. High Commissioner for Human Rights Volker Türk said in a statement Tuesday.

Alluding to a wave of protests in Iran in 2022, Türk said demonstrators have sought “fundamental changes” to governance in the country, “and once again, the authorities’ reaction is to inflict brutal force to repress legitimate demands for change.”

“This cycle of horrific violence cannot continue,” he added.

It was also “extremely worrying” to hear some public statements from judicial officials mentioning the prospect of the use of the death penalty against protesters through expedited judicial proceedings, Türk said.

“Iranians have the right to demonstrate peacefully. Their grievances need to be heard and addressed, and not instrumentalized by anyone,” Türk said.

Finland’s foreign minister says she is summoning the Iranian ambassador after authorities in Tehran restricted internet access.

“Iran’s regime has shut down the internet to be able to kill and oppress in silence," Elina Valtonen wrote in a social media post Tuesday, adding, “this will not be tolerated. We stand with the people of Iran — women and men alike.”

Finland is “exploring measures to help restore freedom to the Iranian people” together with the European Union, Valtonen said.

Separately, Finnish police said they believe at least two people entered the courtyard of the Iranian embassy in Helsinki without permission Monday afternoon and tore down the Iranian flag. The embassy’s outer wall was also daubed with paint.

Iranian security forces arrested what a state television report described as terrorist groups linked to Israel in the southeastern city of Zahedan.

The report, without providing additional details, said the group entered through Iran’s eastern borders and carried U.S.-made guns and explosives that the group had planned to use in assassinations and acts of sabotage.

The Israeli military did not immediately comment on the allegations.

The Nobel Peace Prize laureate hailed people who have “long warned about this repression, at great personal risk.”

“The protests in Iran cannot be separated from the long-standing, state-imposed restrictions on girls’ and women’s autonomy, in all aspects of public life including education. Iranian girls, like girls everywhere, demand a life with dignity,” Yousafzai wrote on X.

“(Iran’s) future must be driven by the Iranian people, and include the leadership of Iranian women and girls — not external forces or oppressive regimes,” she added.

Yousafzai was awarded the peace prize in 2014 at the age of 17 for her fight for girls’ education in her home country, Pakistan. She is the youngest Nobel laureate.

The French Foreign Ministry said it has “reconfigured” its embassy in Tehran after reports that the facility's nonessential staff left Iran earlier this week.

The embassy's nonessential staff left the country Sunday and Monday, French news agency Agence France-Presse reported.

The ambassador remained on site and the embassy continued to function, the ministry said late Monday night.

Associated Press writer Angela Charlton contributed from Paris.

German Chancellor Friedrich Merz said he believes the Iranian government is in its “final days and weeks,” as he renewed a call for Iranian authorities to end violence against demonstrators immediately.

“If a regime can only keep itself in power by force, then it’s effectively at the end,” Merz said Tuesday during a visit to Bengaluru, India. “I believe we are now seeing the final days and weeks of this regime. In any case, it has no legitimacy through elections in the population. The population is now rising up against this regime.”

Merz said he hoped there is “a possibility to end this conflict peacefully," adding that Germany is in close contact with the U.S. and European governments.

The Israeli military said it continues to be “on alert for surprise scenarios” due to the ongoing protests in Iran, but has not made any changes to guidelines for civilians, as it does prior to a concrete threat.

“The protests in Iran are an internal matter,” Israeli military spokesperson Brig. Gen. Effie Defrin wrote on X.

Israel attacked Iran’s nuclear program over the summer, resulting in a 12-day war that killed nearly 1,200 Iranians and almost 30 Israelis. Over the past week, Iran has threatened to attack Israel if Israel or the U.S. attacks.

Mobile phones in Iran were able to call abroad Tuesday after a crackdown on nationwide protests in which the internet and international calls were cut. Several people in Tehran were able to call The Associated Press.

The AP bureau in Dubai, United Arab Emirates, was unable to call those numbers back.

Witnesses said the internet remained cut off from the outside world. Iran cut off the internet and calls on Thursday as protests intensified.

This frame grab from videos taken between Jan. 9 and Jan. 11, 2026, and circulating on social media purportedly shows images from a morgue with dozens of bodies and mourners after crackdownon the outskirts of Iran's capital, in Kahrizak, Tehran Province. (UGC via AP)

This frame grab from videos taken between Jan. 9 and Jan. 11, 2026, and circulating on social media purportedly shows images from a morgue with dozens of bodies and mourners after crackdown on the outskirts of Iran's capital, in Kahrizak, Tehran Province. (UGC via AP)

This frame grab from videos taken between Jan. 9 and Jan. 11, 2026, and circulating on social media purportedly shows images from a morgue with dozens of bodies and mourners after crackdown on the outskirts of Iran's capital, in Kahrizak, Tehran Province. (UGC via AP)

Protesters hold up placards and flags as they demonstrate outside the Iranian Embassy in London, Monday, Jan. 12, 2026. (AP Photo/Alastair Grant)

Shiite Muslims hold placards and chant slogans during a protest against the U.S. and show solidarity with Iran in Lahore, Pakistan, Sunday, Jan. 11, 2026. (AP Photo/K.M. Chaudary)

Activists carrying a photograph of Reza Pahlavi take part in a rally supporting protesters in Iran at Lafayette Park, across from the White House, in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

Protesters burn the Iranian national flag during a rally in support of the nationwide mass demonstrations in Iran against the government in Paris, Sunday, Jan. 11, 2026. (AP Photo/Michel Euler)

People attend a rally in Frankfurt, Germany, Monday, Jan. 12, 2026. (Boris Roessler/dpa via AP)

A picture of Ayatollah Ali Khamenei is set alight by protesters outside the Iranian Embassy in London, Monday, Jan. 12, 2026. (AP Photo/Alastair Grant)