Stocks: Dow closes at highest level since December 2007

Updated 1h 40m ago

NEW YORK (AP) -- The Dow Jones industrial average on Tuesday closed at its highest level since Dec. 28, 2007, as investors looked ahead to two events sure to move markets this week: a Federal Reserve meeting and a court decision on whether Germany can help support its struggling neighbors.

The Dow climbed 0.5%, or 69 points, settling at 13,323. The S&P 500 also gained, rising 0.3%, while the Nasdaq was basically even, edging up by a tiny 0.02%.

Federal Reserve officials will gather for a two-day meeting beginning Wednesday. Many expect the central bank will launch a new effort to revive the sluggish economy.

Germany's high court is expected to rule Wednesday on whether that country can participate in a European bailout fund.

"It's going to get interesting this week," said Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab. He expects the Fed to make some sort of move, especially after the government reported Friday that U.S. employers added fewer than 100,000 jobs in August.

"Prior to the employment report, people weren't as sure," Frederick said. "I am definitely on the majority side here. There's some sort of easing coming."

The Commerce Department reported Tuesday that exports to Europe dropped 11.7% in July, stoking concerns that troubles there could smother the U.S. recovery. Overall U.S. exports fell 1% to $183.3 billion, lowered by weaker sales of autos, telecom equipment and heavy machinery.

Morgan Stanley and Citigroup rose after the banks settled a dispute over their jointly owned brokerage firm, Morgan Stanley Smith Barney.

The deal cleared the way for Morgan Stanley to buy Citigroup's 49% stake.

A profit warning from luxury clothing chain Burberry helped pull down other high-end retailers in early trading. Burberry said slowing sales to China will likely weaken earnings. Ralph Lauren lost $4.75 to $155.56. Tiffany & Co. sank an even $1 to $62.04.

Among other stocks making moves was Hewlett-Packard. The computer and printer maker said late Monday that it will cut 29,000 jobs by October 2014, or 2,000 more than it had previously planned. Sales of personal computers have slumped as people favor smartphones and lightweight tablet computers.

Stocks: Dow closes at highest level since December 2007