MATTHEW CRAFTNEW YORK (AP) â¿¿ A two-day rally that sent stocks soaring last week fizzled out Monday. European leaders vowed Thursday and Friday to keep the continent's monetary union intact, and investors sent stock markets shooting higher. But stocks were little changed Monday as investors waited to see if they would back up their words with action. The Dow Jones industrial average sank 2.65 points to close at 13,073.01. JPMorgan Chase led the Dow lower, falling 2 percent to $36.14. U.S. Treasury Secretary Timothy Geithner met separately with Germany's finance minister and the head of the European Central Bank, Mario Draghi, on Monday. Draghi's pledge to do whatever was needed to protect the euro set off a market rally last week. The Dow rose back above 13,000 for the first time since May and is now up 1.5 percent for the month. Hopes are high that Draghi will announce plans to support the euro when the central bank meets Thursday, said David Brown, the CEO and chief market strategist at the research firm Sabrient. "I think that's the big story this week," Brown said. "The market has really responded to his bold statement. I hope the ECB takes action. If they don't do anything, it's not going to be pretty." Investors are also looking toward the Federal Reserve's meeting this week. Many in the financial markets believe the Fed will take new steps to stimulate the economy in coming months. The Fed will release its statement on interest rate policy Wednesday afternoon. Besides the Fed statement and the ECB meeting, another potentially market-moving event comes up Friday, when the U.S. Labor Department releases its monthly employment survey. Economists expect that the unemployment rate will remain at 8.2 percent. In other Monday trading, the broader Standard & Poor's 500 index fell 0.67 of a point to 1,385.30, while the Nasdaq dropped 12.25 points to 2,945.84.
The indexes had been creeping higher early in the day, then reversed course soon after a regional manufacturing report came in much weaker than analysts had expected. A survey of manufacturing by the Dallas branch of the Federal Reserve showed a steep drop in July. Economists had forecast a modest gain.Two corporate deals announced early Monday pushed some stocks higher. Chicago Bridge & Iron Co. agreed to buy Shaw Group for $3 billion in cash and stock. Shaw jumped $14.80, or 55 percent, to $41.49. Medical and industrial equipment maker Roper Industries said it plans to buy hospital software company Sunquest Information Systems for $1.42 billion. Roper also raised its earnings estimate for the year, a result of the pending merger and a stronger dollar. Roper gained 1 percent to $99.64. Sunquest is privately owned. History suggests the stock market could head higher in the coming months, said Sam Stovall, chief equity strategist at S&P Capital IQ. Stocks usually hit their annual peak in the second half of the year. But Stovall said economic reports and earnings estimates "point to a more challenging period ahead." Of the 294 companies in the S&P 500 that have reported earnings so far, 195 have surpassed analysts' expectations. But the bar was set low. Analysts now expect quarterly profits will sink 0.25 percent and revenue will rise just 1.9 percent compared with the year before, according to S&P Capital IQ. That would be the worst earnings season since the summer quarter of 2009. Among other stocks making big moves: â¿¿ Supermarket operator Supervalu rose 13 percent, or 25 cents, to $2.24 after the company announced that it would oust its CEO. Earlier this month, the Minneapolis company reported weaker sales and profits and suspended its dividend. Supervalu also said it may put itself up for sale.
â¿¿ Loews Corp. sank 5 percent after reporting that its net income plunged 78 percent in the second quarter. The holding company, controlled by New York's Tisch family, took a hit as falling energy prices lowered the value of its oil and gas properties. The company runs Diamond Offshore Drilling Inc., HighMount Exploration & Production and Loews Hotels. Its stock lost $2.16 to $39.54.â¿¿ Suntech Power Holdings plunged 15 percent. The Chinese solar company said it may be the victim of a massive fraud. Suntech dropped 23 cents to $1.34. The solar company's stock has lost 82 percent of its market value over the past year.