Wall St slides on euro zone deal doubts, Intel view

 

• A trader works on the floor of the New York Stock Exchange in New York December 9, …Stocks fell on Monday after the three major credit ratings agencies issued new warnings that European leaders have failed to take the coordinated action necessary to tackle the region's debt crisis.

Worries about the deal worked out at Friday's European summit plagued sentiment, and a lowered revenue outlook by Intel, the world's largest chip maker, also took a toll.

Fitch Ratings on Monday said failure by European Union leaders to come up with a "comprehensive" solution to the region's debt crisis has increased short-term pressure on debt ratings of euro zone countries.

The decline was broad, with all l0 S&P industry groups in negative territory.
Intel Corp was the Dow's biggest decliner, falling 4.8 percent to $23.81, after the company cut its fourth-quarter revenue forecast due to supply shortages of hard disk drives.
An index of semiconductor makers <.SOX> fell 3.4 percent.

U.S. banks were among the worst performers on renewed concern that problems in Europe's financial system could spill over to U.S. institutions.

The S&P financial sector <.GSPF> was down 3 percent. Bank of America Corp fell 4.9 percent to $5.44, and JPMorgan Chase & Co lost 3.9 percent to $31.88.

"The pact that was agreed upon by European officials still has a long way to go in order to come to fruition, and that leaves the market open to riot," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"We're seeing that sentiment surface in Italian bond yields, and that suggest the market is still highly skeptical of any solution to the risk of significant default that could be brought forward in the coming days."

The Dow Jones industrial average <.DJI> was down 233.41 points, or 1.92 percent, at 11,950.85. The Standard & Poor's 500 Index <.SPX> was down 26.34 points, or 2.10 percent, at 1,228.85. The Nasdaq Composite Index <.IXIC> was down 49.72 points, or 1.88 percent, at 2,597.13.

Italian one-year borrowing costs stayed close to a record high at an auction. Yields on 10-year Italian bonds briefly threatened the 7 percent level, which is considerable a danger zone. An index of European equities <.FTEU3> closed down about 1.9 percent.

Moody's and Standard & Poor's reminded markets on Monday that the deal reached last week was not enough to diminish the chance of sovereign ratings downgrades in the euro zone in the near- to mid-term. Last week, S&P put 15 euro zone countries on a watch for potential credit rating downgrades.

Last week, the European Union decided to set stricter budget rules for the single currency area and to provide up to 200 billion euros in bilateral loans to the International Monetary Fund in response to the turmoil.

Resource-related stocks also tumbled as U.S. crude oil futures fell 1.7 percent and copper prices dropped 2.8 percent to a near two-week low on deepening concern over Europe.

Alcoa Inc was off 3.8 percent to $9.27, and Freeport McMoRan Copper & Gold Inc dropped 4.1 percent to $38.10.