Stocks closed sharply lower Monday once two big rating agencies criticized a fiscal pact between European leaders last week that’s geared toward easing the region’s debt crisis.
Fitch Ratings said the deal to bind Europe’s budgets more closely can create little distinction. The region can face “a significant economic downturn” because it wrestles with its sovereign debt crisis for one more year or more, Fitch predicted.
The Dow Jones industrial average dropped as several as 243 points in afternoon trading before closing down 163. Intel Corp. dragged the stock market lower, falling 4 p.c after the chipmaker said its fourth-quarter revenue will be less than expected due to offer chain problems. Intel is taken into account a bellwether for the pc business as a result of its chips are employed in a wide vary of merchandise.
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The euro hit a 10-week low against the dollar, plunging nearly a pair of cents. Yields on Italian bonds rose as investors fretted that nation’s debt burden. European stocks fell.
Moody’s Investors Service said that it’ll review the credit ratings of all European Union nations in the 1st quarter of next year. The statement doused optimism among investors that had lifted stocks and alternative risky assets late last week.
The summit created “few new measures” and Europe remains in an exceedingly “critical and volatile stage,” Moody’s said during a revealed report. The pact, Moody’s noted, does not address Europe’s immediate problem: the crushing debt numerous some nations and their rising borrowing prices.
The agreement “kicks off a method that has a chance of solving future crisis, not this one,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. “The problem is the changes they’ve agreed to go toward solving the basis of current problems twelve months from now.”
Stocks fell broadly, with declines across all ten business groups in the commonplace & Poor’s 500 index and 28 of the thirty stocks within the Dow.