On Wall Street, stocks fall as rating agencies knock euro deal

Associated Press

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.”

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. Treasury yields fell as investors shifted money into U.S. government debt.