Shares Rally to Give Indexes Their Best Day of the Year

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Car Sales in Europe End 2013 With a Rally

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July Rally Seems to Wane as Shares Slip, Pending Major Economic Reports

The July rally in the stock market appears to be fading.

Stocks edged lower on Monday as investors awaited major economic news this week. Several big-name mergers were not enough to push the main market indexes higher.

The government will report its first estimate of economic growth for the second quarter on Wednesday, and it will release its employment report for July on Friday.

The Federal Reserve may give some indication about the future of its economic stimulus program on Wednesday after the central bank’s two-day policy meeting. The Fed’s stimulus has been a major factor supporting a four-year rally in stocks.

The Standard & Poor’s 500-stock index dropped 6.32 points, or 0.4 percent, to close at 1,685.33.

Seven of the 10 sectors in the S.& P. 500 fell. The declines were led by energy companies and banks.

The S.& P. 500 is still up 4.9 percent in July, and it appears to be on track to have its best month since January. The index reached a nominal closing high on July 22, after Ben S. Bernanke, the Fed chairman, assured investors that the central bank would not cut its stimulus before the economy was ready. The Fed is buying $85 billion a month in Treasury and mortgage-backed securities to help keep interest rates low and encourage borrowing and hiring.

The Dow Jones industrial average fell 36.86 points, or 0.2 percent, to 15,521.97. The Nasdaq composite index dropped 14.02 points, or 0.4 percent, to 3,599.14.

Stocks may struggle to add to their gains, given that expectations for the economy remain modest, said Scott Wren, a senior equity strategist at Wells Fargo Advisors.

Economists estimate that the economy grew at an annual rate of just less than 1 percent in the second quarter. That would be about half the 1.8 percent annual growth rate in the first quarter.

“I don’t think you’re going to see the market sustain much higher levels than this,” Mr. Wren said. “All this data is going to show that we are slowly improving, but it’s a slow process and there’s not much to get excited about.”

Three corporate deals did not excite the broader stock market.

The luxury retailer Saks rose 64 cents, or 4.2 percent, to $15.95 after the Canadian retailer Hudson’s Bay, the parent company of Lord & Taylor, agreed to buy it for $2.4 billion, or $16 a share.

The Interpublic Group, a big advertising company, jumped 74 cents, or 4.7 percent, to $16.61 after the Omnicom Group agreed to combine with Publicis Groupe of France to create the world’s largest advertising company. Interpublic’s stock gained even after the company’s chief executive, Michael Roth, said that he saw no need for a major merger to keep the company moving forward.

Omnicom shares climbed as high as $70.50 in early trading, but ended the day down 36 cents, or 0.6 percent, at $64.75.

Perrigo stock fell $9.06, or 6.75 percent, to $125.17 after the drug maker agreed to buy the Irish biotechnology company Elan in a deal valued at $8.6 billion.

The deals should encourage more merger activity, said Dan Veru, chief investment officer at Palisade Capital Management. “Companies are struggling to grow organically,” he said. “So, how do they grow? They grow by buying other businesses.”

In government bond trading, the price of the 10-year Treasury note fell 9/32, to 92 23/32, while its yield rose to 2.60 percent, from 2.56 percent late Friday. The 10-year note’s yield is up nearly 1 percentage point since the start of May, when it hit 1.62 percent, its low point of the year.

DealBook: Profit at Nomura Surges on Rally in Japanese Markets

Traders Book Day’s Gains, Blunting a Rally Set Off by Encouraging Economic Data

Stocks climbed on Monday, the first day of the third quarter, supported by signs of strength in the manufacturing and construction sectors. Even so, the major stock indexes pulled back from their session highs late in the day as investors sold some shares to book profits.

The Standard & Poor’s 500-stock index closed up 0.54 percent after jumping as much as 1.27 percent earlier in the day. But the gains followed the S.& P.’s rally of 12.6 percent in the first six months of 2013, which is the strongest first half of a year since 1998 for the benchmark.

“We’ve had a couple days of pretty good moves, and on Friday and today, you’ve had some intraday profit-taking,” said Richard Meckler, president of the hedge fund LibertyView Capital Management, in Jersey City, N.J.

Wall Street showed signs of stabilization last week after a sell-off that began because of concerns that the Federal Reserve’s bond-buying policy would end sooner than expected. June was the S.& P. 500’s first negative month since October.

Among the S.& P. 500’s 10 industrial sectors, the telecommunication and utilities sectors were the decliners of the day. The S.& P.’s telecommunication sector index slipped 0.1 percent, and its utilities sector index lost 1.3 percent.

The day’s early rally was brought on by data from the Institute for Supply Management that showed that American manufacturing activity grew in June, rebounding from an unexpected contraction in May.

The Dow Jones industrial average rose 65.36 points, or 0.44 percent, to close at 14,974.96. The S.& P. 500 advanced 8.68 points, or 0.54 percent, to finish at 1,614.96. The Nasdaq composite index gained 31.24 points, or 0.92 percent, to end at 3,434.49.

While fears about the Fed’s early exit from its stimulus efforts have calmed for now, analysts said the transition to a no-stimulus environment could cause further volatility.

“I still believe the market is trying to figure out how to price in slightly higher interest rates, even if rate increases from the Federal Reserve are still at least a year away,” said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research in Austin, Tex.

In government bonds, the benchmark 10-year Treasury note increased 3/32 to 93 22/32, sending the yield down to 2.48 percent, from 2.49 percent late Friday.

Court Staffers Rally in Los Angeles Over Closure Plans

Several hundred court workers and community activists rallied in front of the Stanley Mosk Courthouse on Thursday, protesting the Los Angeles trial court's plans to close all or parts of 10 courthouses and consolidate services throughout the county.

"Our interest is not just with court workers," said Ian Thompson, a spokesman for Service Employees International Union Local 721, which represents about 3,400 Southern California court employees. "Our members, some of whom will lose their jobs if this goes through, are worried about public service."

Court leaders have announced that they will shutter eight courthouses completely and "remove most court work" from two other sites to deal with a budget deficit that could reach $85 million. Officials are also consolidating specific case types in limited locations. All unlawful detainer cases, for instance, must soon be filed in one of only five "hubs," forcing some litigants and lawyers to make lengthy commutes or public-transit trips to far-flung locations. Currently, tenants may appear in one of 26 neighborhood courtrooms throughout the county.

Court officials have also warned that approximately 500 jobs will be eliminated, although not all of the positions are currently filled.

Los Angeles County Superior Court Presiding Judge David Wesley said in a statement that his court no longer has the funding to keep neighborhood courts open.

"We are now being forced by budget cuts to make changes that will disadvantage litigants, attorneys, justice system partners and all court users across the spectrum and across our court," Wesley said.

In past years, court workers have directed their budget ire at the state Administrative Office of the Courts, accusing the centralized bureaucracy of profligate spending on pet projects at the trial courts' expense. This time, rally-goers expressed anger at L.A. judges for not consulting with labor or community groups before announcing the upcoming closures.

"The judges made the decision," Thompson said. "They launched this consolidation plan. They have the power to scale it back."

A statement released by the court Wednesday said court leaders met with "hundreds" of attorneys, law enforcement officials and county representatives before deciding on the closure plan.

Thursday's rally followed on the heels of a lawsuit filed by four community groups that claim reducing the number of courthouses where eviction cases are heard is unfair to poor tenants and those with disabilities. The complaint, filed in U.S. District Court in L.A., names Los Angeles Presiding Judge Wesley, Governor Jerry Brown and court executive officer Jack Clarke as defendants.

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