Wall Street greeted
a second Barack Obama term the way it greeted the first. Investors dumped stocks on Wednesday in the sharpest sell-off of the year.
With the election only hours behind them, they focused on
big problems ahead in Washington and across the Atlantic Ocean. Frantic selling recalled the days after Obama's first victory, as the financial crisis raged and stocks spiraled downward.
Four years later, American voters returned a divided government to power and left investors fretting about a package of tax increases and government spending cuts that could stall the economic recovery unless Congress acts to stop it by January 1.
The Dow Jones industrial average plummeted as much as 369 points, or 2.8 per cent, in the first two hours of trading. It recovered steadily in the afternoon, but slid into the close and ended down 313, its biggest point drop since this time last year.
The Dow closed down 312.95 points, or 2.4 per cent, at 12,932.73 - its first close below 13,000 since August 2.
The Standard & Poor's 500 index fell 33.86 points, or 2.4 per cent, to 1,394. That was the broader index's first close below 1,400 since Aug. 30.
The Nasdaq composite index lost 74.64 points, or 2.5 per cent, to 2.937.29.
US stock futures had risen overnight after Obama cruised to victory. They turned sharply lower after
the European forecasts and discouraging comments from Mario Draghi, president of the European Central Bank.
It was the worst day for stocks this year, but not the worst after an election. That distinction belongs to 2008, when Barack Obama was elected at the depths of the financial crisis. The Dow fell 486 points the next day.
This time, energy companies and bank stocks took some of the biggest losses. Both industries would have faced lighter, less costly regulation if Mitt Romney had won the election.
Stocks seen as benefiting from Obama's decisive re-election rose. They included hospitals, suddenly free of the threat that Romney would roll back Obama's health care law.
Obama was elected November 4, 2008. The Dow plunged more than 400 points on each of the next two trading days.
The blue-chip average hit bottom at 6,547 in March 2009, less than two months after Obama took office. Then it doubled over the next three-plus years as the crisis eased and a fragile economic recovery took root.
With the 2012 election over, traders turned to Europe's increasingly sickly economy, dragged down by a debt crisis for more than three years. The 27-country European Union said unemployment there could remain high for years.
The European Commission , the executive arm of the EU, said that it expects the region's economic output to shrink 0.3 per cent this year. In the spring, the group predicted no change.
For next year, the commission predicted 0.4 per cent growth, barely above recession territory. It predicted 1.3 per cent last spring.
Renewed focus on European economic problems also pushed the price of oil down $4.27 per barrel, its biggest decline of the year, to finish at $84.44, the lowest since July 10.
European markets closed sharply lower, with benchmark indexes in France and Germany losing 2 per cent. Italy lost 2.5 per cent; Spain lost 2.3 per cent.
As traders streamed into lower-risk investments, the yield on the 10-year Treasury note plunged to 1.64 per cent from 1.75 per cent late on Tuesday. A bond's yield declines as demand for it increases.
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