J.P. Morgan Chase dragged the Dow Jones Industrial Average into negative territory, marking the ninth-consecutive Monday the blue chips have closed lower.
HSBC logos are displayed inside an office tower in Hong Kong.
The New York lender's shares fell 2%, serving as the single-biggest weight on the Dow. It pulled the average into the red after the bank was downgraded by Deutsche Bank.
The downgrade was J.P. Morgan's first from a large bank since its surprise trading loss earlier this year raised questions about risk management and regulatory concerns.Without the bank's share-price slide, the Dow would have gained on the day.
The Dow fell 2.65 points to 13073.01 in light Monday trading. The Standard & Poor's 500-stock index fell 0.67 point to 1385.30, and the Nasdaq Composite Index fell 12.25 points, or 0.4%, to 2945.84.
A reading of manufacturing activity in the Dallas region in July came in at negative 13.2, a steep drop from the previous month's measure of 5.8. In corporate news, Facebook fell 2.3%, marking its lowest-ever closing value.
The company posted earnings per share Thursday that were in line with Wall Street expectations, but showed slowing revenue and didn't provide many details on the social-network's future performance. AT&T rose 0.8% after the blue-chip telecom company said it increased its stock-repurchase program by 300 million shares, which represents about 5% of the company's shares outstanding.
American depositary shares of Trina Solar fell 11% after the solar-panel provider lowered its guidance for the second quarter, citing lower-than-expected shipment volume. In deal news, Shaw Group soared 55% after the engineering-and-construction company agreed to be acquired by Chicago Bridge & Iron in a deal valued at $3 billion.
EUROPEAN STOCKS, BONDS
European stocks Monday posted their highest close since early April, extending last week's rally on expectations the region's leaders will take steps to curb the debt crisis, including buying government debt.
The Stoxx Europe 600 index rallied 1.6% to 263.94. Shares of Air France-KLM surged 19%, as the airline reported a 895 million euro ($1.1 billion) second-quarter loss due to one-off charges, but said it expects an improvement in the back half of the year and beating market expectations.
Shares in outdoor-advertising firm JCDecaux SA sank 6.9% after the France-based company reported a drop in first-half profit and said it doesn't expect an improvement in the third quarter.
Bank shares rose on hopes that European policy makers would act to curb the region's sovereign-debt problems. The head of the Eurogroup, Jean-Claude Juncker, said in an interview with a German newspaper that the euro-area countries, the rescue fund and the ECB would soon act to save the shared currency.
France's CAC 40 index added 1.2% to 3,320.71, as BNP Paribas SA rose 3.3% and Credit Agricole SA climbed 7%. On the data front, the European Commission said its July sentiment indicator for the currency area fell to 87.9 from 89.9 in June, coming in below expectations.
Yields on 10-year Spanish government bonds fell 12 basis points to 6.58%, according to electronic trading platform Tradeweb.
Gross-domestic-product data released Monday showed a 0.4% contraction in the second quarter. Spain's IBEX 35 index jumped 2.8% to 6,801.80. BBVA SA rose 4.3%, while heavyweight Banco Santander SA picked up 4.1%.
In Italy, the FTSE MIB index surged 2.8% to 13,978.04, after the government sold EUR5.479 billion in government debt at lower borrowing costs than in a late-June auction.
Germany's DAX 30 index climbed 1.3% to 6,774.06, with Deutsche Bank AG up 2%. Potash and salt firm K+S AG added 2.7% after reporting a rise in second-quarter operating earnings and revenue.
ASIA-PACIFIC STOCK MARKETS
Asian markets rose Monday, with Australian shares touching an 11-week high, as European leaders offered reassurances that it will take action to tackle the debt crisis.
Investors are also looking ahead to the U.S. Federal Reserve's Open Market Committee meeting Tuesday and Wednesday to see whether the U.S. central bank will ease policy.
Japan's Nikkei was up 0.8% at 8635.44 and South Korea's Kospi was 0.8% higher at 1843.79. Hong Kong's Hang Seng Index was 1.6% higher at 19585.40, with index heavyweight HSBC up 1.7% ahead of its earnings report later in the day.
The Shanghai Composite was down 0.9% at 2109.91. In Hong Kong, shares in companies controlled by Zhang Zhirong, the Chinese tycoon behind a company that was implicated in an insider-trading investigation in the U.S., fell Monday with China Rongsheng Heavy Industries Group crashing 16.4% and Glorious Property dropping 10.6%.
Shipbuilder China Rongsheng also issued a profit-warning saying first-half net profit is expected to fall "significantly" from a year earlier.
Shipping giant China Cosco fell 3.7% after the company said Friday that it expects to post a first-half net loss for 2012 due to weak global demand and slowing growth in China. In earnings news, Fujifilm was one of the best performers on the Nikkei, rising 6.2% after it announced a better-than-expected operating profit in the first quarter. Also in Japan, Fujitsu fell 12.5% after the company announced a deeper operating loss in the first quarter compared with a year earlier. Construction equipment manufacturer Komatsu slipped 1.8% after a Nikkei report said it is expected to report its first operating profit decline in 10 quarters, in part due to a fall in sales to China.
Base metals closed mostly marginally higher on the London Metal Exchange Monday, continuing to tread water as investors waited on the sidelines to take direction from key macro developments later in the week. At the close, LME three-month copper was down 0.3% at $7,542 a metric ton. Nickel recorded the strongest rise among the gainers, up 2.3% at $16,245/ton. Crude oil futures took a breather Monday, falling marginally as investors looked ahead to a busy week of economic news. Nymex front-month oil futures settled at $89.78 a barrel Monday, down 35 cents, or 0.4%. Brent oil futures settled at $106.20, down 27 cents. Markets are eyeing the conclusion of a Federal Open Markets Committee meeting Wednesday, a European Central Bank meeting Thursday and new U.S. jobs figures Friday. In addition, the weekly petroleum inventory report is due Wednesday. Gold futures inched higher, gaining for a fourth consecutive trading session, lifted by hopes of new accommodative measures from central banks later this week. The most actively traded contract, for August delivery, rose $1.70, or 0.1%, to settle at $1,619.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Compiled from MORRISON SECURITIES PTY. LTD.
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