NEW YORK (TheStreet) -- Stocks fell sharply Monday as skepticism about Europe's debt-crisis plan took hold and tech bellwether Intel (INTC) warned of weak gross margins and a revenue shortfall.

The Dow Jones Industrial Average dropped 163 points, or 1.3%, to close at 12,021. The blue-chip index's low for the session was 11,941. The triple-digit decline wiped out most of a 187-point rally on Friday.

The S&P 500 fell 19 points, or 1.5%, to settle at 1236 and the Nasdaq lost 35 points, or 1.3%, to finish at 2612.

"So far, it is doom and gloom out there," said James "Rev Shark" DePorre, founder and CEO of Shark Asset Management. "Typically, a gap down open on Monday will attract some dip-buying efforts, but so far, the bulls are standing aside and doing nothing."

A critique of Friday's European Union summit from Fitch Ratings pushed stocks lower in the morning. The firm said that the region's debt crisis will extend beyond 2012 and that a lack of any comprehensive solution will put pressure of its ratings in the eurozone. The euro hit a fresh low for the day after the report.

Monday's release from Fitch adds to similar warnings from Moody's and Standard & Poor's. Moody's said Monday the summit failed to deliver "decisive policy measures," adding that it will complete its review on sovereign debt in the first quarter of 2012, while S&P put a negative credit watch on the eurozone sovereign debt last week, saying it would conclude its review sometime after the EU summit.

On Friday, all 27 countries in the European Union, except Britain, agreed to stricter budget rules and to pour €200 billion in bilateral loans into the International Monetary Fund in an attempt to prop up weaker nations in the debt crisis. However, details on the plans remain thin and economists say Europe's current bailout fund is still an insufficient safety net if debt problems of core eurozone countries worsen.

While the general perception is that Europe has taken some steps in the right direction, critics say the "fix" from last week's European Union summit fails to address shorter-term pressures. Furthermore, the European Central Bank stopped short of signaling it would step up its role in buying up government debt.

Germany's DAX shed 3.3% while London's FTSE closed 1.8% lower. Overnight, Asian stocks snapped a two-day loss. Japan's Nikkei Average settled 1.37% higher, and Hong Kong's Hang Seng Index closed down 0.06%.

"There was widespread chatter that Friday's summit of European leaders in Brussels would be a 'make-or-break' event for the eurozone. So far, it seems to be more of the same lame attempts to clean up the Euro mess as over the past two years," wrote Ed Yardeni, economist and investment strategist with Yardeni Research.

"Perhaps the most important provision in the latest grand plan is the one authorizing the euro area countries and other members of the EU to provide the IMF with up to ¿200 billion in bilateral loans. These funds, which reportedly will be made available by European central banks, could be used to extend precautionary credit lines to Italy and Spain, helping them muddle through their debt refinancing crunches during the first quarter of 2012."

In corporate news, Intel ( INTC) reduced its fourth quarter gross margin guidance to 64.5% from 66%. The Dow component, which is the biggest semiconductor company in the world, said it expects fourth quarter revenue to come in at $13.7 billion instead of the estimated $14.65 billion, warning that hard drive shortages will continue into the first quarter of 2012 as the result of severe flooding in Thailand. Shares tumbled 4% to $24.

Hewlett-Packard ( HPQ) announced plans Friday to open source webOs. HP acquired webOS as part of its $1.2 billion acquisition of Palm last year. Rumors have swirled around the technology since HP announced plans to ditch its WebOS hardware during the summer. Potential scenarios included selling off or licensing the operating system to other vendors. The move could disappoint those calling on HP to monetize the technology by licensing it out. Shares fell 1.6% to $27.34.

Pfizer ( PFE) is looking to return some cash to shareholders. The Dow component said Monday its board has approved a 10% increase in its quarterly dividend to 22 cents a share from the current payout of 20 cents, along with an additional $10 billion buyback authorization. Shares were down 0.8% to $20.39.

Media and entertainment company Time Warner ( TWX) has approached Endemol, the Dutch producer of the Big Brother TV shows, with a revised, all-cash offer of $1.3 billion, according to The New York Post. The bid comes as Endemol tries to agree on a debt reorganization plan with creditors. Shares were behind by 1% to $34.24.

Online retail giant Amazon ( AMZN) will likely soon release an improved version of the much-criticized Kindle Fire product, according to The New York Times. Shares were down 1.8% to $189.52.

FedEx ( FDX) said Monday, its biggest shipping day of the holiday season, maybe also be its biggest in history, as businesses restock their shelves and online home shopping volume increases. FedEx anticipates handling more than 17 million shipments on Monday, up from the peak of 15.6 million a year ago. The company said it has hired an additional 20,000 employees to handle holiday shipping volume. Shares fell 1.9% to $81.63.

Diamond Foods ( DMND) said it won't file its quarterly financial statements on time because the company's audit committee isn't done with an investigation on how the company accounted for payments to walnut growers in light of several class-action lawsuits last month. The audit committee plans to finish its investigation by February 2012. Shares plunged 22.8% to $31.30.

January oil futures lost $1.64 to $97.77 a barrel, and February gold futures fell $48.60 to settle at $1,668.20 an ounce as the U.S. dollar stayed the safe haven of choice.

The benchmark 10-year Treasury was up 15/32, diluting the yield to 2.017%, and the U.S. dollar was up 1.1% against a basket of currencies.

-- Written by Andrea Tse and Chao Deng in New York.

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