US stocks pulled back across the board on Monday as initial enthusiasm about
last week's EU compact faded, Xinhua reported.
The Dow Jones industrial average dropped 162.87 points, or 1.34 per cent, to 12,021.39. The Standard & Poor's 500 fell 18.72 points, or 1.49 per cent, to 1,236.47. The Nasdaq Composite Index lost 34. 59 points, or 1.31 per cent, to 2,612.26.
The decline came after Friday's rally as 17 eurozone members plus up to nine non-eurozone EU states basically agreed to join the compact based on "inter-governmental treaties" to take unprecedented measures to oversee national economies, with sanctions for governments that run up high deficits.
Under the deal, nations will make a constitutional commitment to balanced budgets with a structural deficit of less than 0.5 per cent of gross domestic product. Meanwhile, the leaders also agreed to bring forward by a year the creation of the 500 billion euro European Stability Mechanism so it should be ready by July 2012.
MUST READ: What's in the new deal to save the euro? What's more, the leaders agreed to increase the resources of the International Monetary Fund by 200 billion euro in bilateral loans to ensure it has enough resources to intervene again in the euro crisis if needed.
However, the euphoria faded after a weekend and investor began to worry the compact was far from enough to curb the region's debt crisis, especially after rating agencies warned that the summit did nothing to ease the pressure on the eurozone sovereign debt.
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