Stocks slump on Europe debt-fix doubts

A week ago, markets were soaring on hopes that a fix for Europe's debt crisis was near. But Monday stocks had their worst drop in two weeks after German leaders cast doubt on how fast that process would be.

Expectations that a resolution to the crisis could be reached at a European summit in Brussels this Sunday helped lift the Standard & Poor's 500 index to its biggest gain in two years last week. Germany's finance chief Wolfgang Schaeuble said Monday those expectations were too optimistic.

It was the worst day for U.S. stock indexes since Oct. 3, when each hit a low for the year. Monday, the Dow Jones industrial average dropped 247.49 points, or 2.13 percent, to close at 11,397.00. The S&P lost 23.72, or 1.94 percent, to 1,200.86. All 10 industry groups in the S&P were lower. The Nasdaq composite index fell 52.93, or 1.98 percent, to 2,614.92.

"It's completely a reaction to Germany," said Jason Pride, the director of investment strategy at Glenmede, a Philadelphia wealth-management firm. "The reality is everybody is hanging on to what Europe's doing."

A batch of weak corporate earnings reports also pulled stocks lower. Gannett Co. Inc. plunged 8 percent, the most of any stock in the S&P 500, after the newspaper publisher reported a drop in advertising. Wells Fargo sank 8.4 percent after posting results that fell short of analysts' expectations.

Stock markets around the world rallied last week after the leaders of France and Germany pledged to come up with a far-reaching solution to the region's debt crisis by the end of October. That pledge appeared to be pushed back by German officials yesterday. Schaeuble said he expects European leaders to adopt a general framework to tackle the crisis on Sunday. Separately, a spokesman for German Chancellor Angela Merkel said discussions on Europe's debt will likely last into the new year.

News on the U.S. economy was mixed. A measure of U.S. industrial production rose for a third month, but a gauge of New York area manufacturing fell more than Wall Street expected. -- AP