Doubts about Europe deflate U.S. stocks
Specialist Philip Finale executes trades at the New York Stock Exchange yesterday as the markets reacted to ratings agencies’ criticism of the European leaders’ fiscal pact made last week. (Dec. 12, 2011) Credit: AP
Stocks closed sharply lower Monday after doubt emerged that last week's historic agreement to bind the budgets of European countries more closely together will solve the region's financial crisis.
Fitch Ratings said the region will face "a significant economic downturn" as it wrestles with its sovereign debt crisis for another year or more. Moody's Investors Service 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."
Intel Corp. dragged the Dow Jones industrial average lower, falling 4 percent after the chip maker said its fourth-quarter revenue will be lower than expected because of supply chain problems caused by massive flooding in Thailand. 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 1.34 percent, at 12,021.39. It was down as much as 243 points before rising in the final hour of trading. Monday's loss erased nearly all of the Dow's gains from last week. The Standard & Poor's 500 index lost 18.72 points, or 1.49 percent, to close at 1,236.47. The Nasdaq composite index dropped 34.59, or 1.31 percent, to close at 2,612.26.
Moody's ratings service said earlier in the day it will review the credit ratings of all European Union nations in 2012's first quarter. Europe, it said, remains in a "critical and volatile stage," and the new pact does not address the immediate problem: the crushing debt loads of some nations and their rising borrowing costs. Last week's accord calls for tougher discipline among European countries and a central authority with the ability to punish those that spend too much.
Bank stocks declined steeply. Investors fear big banks might be damaged by the turmoil in Europe. Morgan Stanley fell 6.1 percent, Citigroup Inc. 5.4 percent. Bank of America Corp. and JPMorgan Chase & Co. posted the biggest and third-biggest losses in the Dow 30, falling 4.7 percent and 3.4 percent, respectively.
Out East with Doug Geed: Wine harvests, a fish market, baked treats and poinsettias NewsdayTV's Doug Geed visits two wineries and a fish market, and then it's time for holiday cheer, with a visit to a bakery and poinsettia greenhouses.
Out East with Doug Geed: Wine harvests, a fish market, baked treats and poinsettias NewsdayTV's Doug Geed visits two wineries and a fish market, and then it's time for holiday cheer, with a visit to a bakery and poinsettia greenhouses.
