Stock Market News Review: SPY, QQQ Tick Higher as U.S.-China Trade Talks End, Inflation Expectations Drop

Both the S&P 500 (SPX) and the Nasdaq 100 (NDX) barely managed to finish Monday in positive territory following steep declines during the last trading hour.

This morning, the U.S. and China began their second round of trade talks. At the center of discussions are China’s export curbs on rare earth minerals, which are used in everything from chips to smartphones to electric vehicles. According to the Financial Times, the U.S. is considering easing restrictions on its chip exports if China agrees to increase the flow of its rare earths to the U.S. The U.S. is also considering easing restrictions on semiconductor software, aircraft parts, and ethane as it brings bargaining chips to the table.

“Our expectation is that after the handshake, then immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,” said White House economic advisor Kevin Hassett.

While day one of the discussions, which lasted roughly six hours, has ended, the negotiations will continue tomorrow morning. Treasury Secretary Scott Bessent described the conversation as a “good meeting” while Commerce Secretary Howard Lutnick characterized it as “fruitful.” Neither Bessent nor Lutnick provided any further details. President Trump said that the talks went well and that China should open itself up for trade.

Meanwhile, inflation expectations are falling across the board. After rising to 3.6% in April following President Trump’s reciprocal tariffs, the one-year inflation expectation for May dropped to 3.2%, according to the New York Fed’s May Survey of Consumer Expectations. Long-term inflation expectations fell too, with the three-year at 3.0% and the five-year at 2.6%, down by 0.2% and 0.1%, respectively. On top of that, the corporate earnings growth outlook is rising, with the median one-year-ahead earnings growth expectation increasing by 0.2% to 2.7%.

The S&P 500 ended the trading session with a 0.09% gain while the Nasdaq 100 fared slightly better with a 0.17% rise.