By msnbc.com news services
Stocks were lower Monday as weak economic data from Europe and China kept a lid on shares after the market posted its best daily gain since December.
U.S. stocks finished the first half of the year with a bang on Friday as investors welcomed news that the euro zone appeared a step closer to solving its 30-month-long debt crisis.
But the rally is expected to run out of steam on Monday as data showed euro zone manufacturing shrank again in June and factories are preparing for worse, according to business surveys showing jobs were cut at the fastest pace in two-and-a-half years. The data showed factories in Germany and France are succumbing to a downturn that started in southern Europe.
Also adding to concerns, UBS cut its year-end target on the S&P 500 index to 1,375, from 1,475. Jonathan Golub, strategist at UBS, cited the following reasons: deterioration in incoming U.S. economic data; the Supreme Court's healthcare ruling, which is believed to contribute to greater partisanship ahead of year-end fiscal discussions; and a more contentious tone among European policymakers, despite some success at the most recent Euro summit.
Manufacturing in China, the world's second-biggest economy, also worsened in June with export orders, usually an indicator of global economic health and trade flows, posting their biggest fall since December.
Finland and the Netherlands, meanwhile, cast doubts on last week's European summit deal designed to save Spain and Italy from being engulfed by the euro zone's debt crisis. The Finnish government said Helsinki and its Dutch allies would block the zone's permanent bailout fund from buying bonds in secondary markets.
"Outside of analyzing Europe's attempt to bail themselves out, we of course have to also watch the collateral damage being done to global economic growth," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
The S&P 500 and the Nasdaq posted their best daily percentage gains since December on Friday after European leaders agreed to stabilize the region's troubled banks, a pact that helped remove some of the uncertainty that has plagued markets.
Bristol-Myers Squibb Co will buy biotechnology company Amylin Pharmaceuticals Inc for about $5.3 billion in cash, helping Bristol-Myers extend its portfolio of diabetes treatments with the addition of drugs Byetta and Bydureon.
A U.S. judge on Friday granted Apple Inc's request for a pre-trial injunction against the sale of Samsung Electronics Co Ltd's Galaxy Nexus phone, handing the iPhone maker its second legal victory against Samsung in a week.
Reuters contributed to this report.
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