Market Recap: Rally's Over, Boys

Markets closed down today:

▼ Dow: -0.02 percent

▼ Nasdaq: -0.41 percent

▼ S&P: -0.05 percent

Precious metals:

▼ Gold: down -0.07 percent to $1,623.50 an ounce

▲ Silver: up +1.50 percent to settle at $27.73

Commodities:

▼ Oil: -0.65 percent

Markets closed down because:

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.

Investors are 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.

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.

The Associated Press contributed to this report.