NEW YORK — Stocks closed sharply lower Monday after two big rating agencies criticized a fiscal pact between European leaders last week that is aimed at easing the region’s debt crisis.
Fitch Ratings said the deal to more closely bind Europe’s budgets will make little difference. The region will face “a significant economic downturn” as it wrestles with its sovereign debt crisis for another year or more, Fitch said. Moody’s said the summit produced “few new measures.”
Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, said the agreement “kicks off a process that has a chance of solving the next crisis, not this one. . . . The problem is the changes they’ve agreed to go toward solving the root of current problems 12 months from now.”
The euro Monday hit a 10-week low against the dollar, plunging nearly 2 cents. Yields on Italian bonds rose as investors fretted about that nation’s debt burden. European stocks fell. Treasury yields fell as investors shifted money into U.S. government debt.
Stocks fell broadly, with declines across all 10 industry groups in the Standard & Poor’s 500 index. Falling stocks outnumbered rising ones 4-to-1 on the New York Stock Exchange.
Intel dragged the Dow Jones industrial average lower, falling 4 percent after the chipmaker said its fourth-quarter revenue will be lower than expected because of supply-chain problems. Intel is considered a bellwether for the computer industry because its chips are used in a wide range of products.
The Dow closed down 162.87 points, or 1.3 percent, at 12,021.39. It was down as much as 243 points before rising in the final hour of trading. The loss erased nearly all of the Dow’s gains from last week.
The S&P 500 lost 18.72 points, or 1.5 percent, to close at 1,236.47. The Nasdaq composite fell 34.59, or 1.3 percent, to close at 2,612.26.
Moody’s said it will review the credit ratings of all European Union nations in the first quarter of next year.
