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 bind Europe's budgets more closely 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 predicted.
The Dow Jones industrial average dove as many as 243 points in afternoon trading before closing down 163. Intel Corp. dragged the Dow 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 euro 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.
Moody's Investors Service said that it will review the credit ratings of all European Union nations in the first quarter of next year. The statement doused optimism among investors that had lifted stocks and other risky assets late last week.
Stocks fell broadly, with declines across all 10 industry groups in the Standard & Poor's 500 index and 28 of the 30 stocks in the Dow.
The Dow closed down 162.87 points, or 1.3 percent, at 12,021.39. The S&P 500 lost 18.72, or 1.5 percent, to close at 1,236.47. The Nasdaq composite index dropped 34.59, or 1.3 percent, to close at 2,612.26.