World Stocks Down as EU Deal Euphoria Fizzles

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The euro and world stocks were down Tuesday, despite earlier market euphoria over an almost $1 trillion plan to stop Europe's debt crisis from spreading.

On Monday, the Dow Jones Industrial Average shot up 400 points to the biggest gains in more than a year.

But now reality is setting in as investors refocus on the health of the global economy.

"Yesterday's burst higher is already looking short lived amidst concern over a wide range of issues," said Ben Potter, research director at IG Markets. "Without doubt when gains of 5 percent or more are seen in a single day a degree of reversion is perhaps to be expected."

"As the dust settles from yesterday's shock and awe bailout package, the realization that this is a sticking plaster to a much deeper rooted problem has slowly permeated through and the euro has given up most of yesterday's gains," said Michael Hewson, analyst at CMC Markets.

Although the massive financial support package has alleviated short-term worries about a wave of European defaults, some are wondering if Europe's massive debt problem is just being pushed off to a later date.

"Events in Europe signal the onset of a fiscal retrenchment across the developed world in the form of lower spending, higher taxation and deeper regulation," Bank of America Merrill Lynch said in a report. "We believe 2010 will be a year of transition for the markets from a 'Raging Bull' market to a 'Sitting Bull'."

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