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Stocks plummet on news of Obama re-election

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By Associated Press

Wall Street greeted a second Obama term the way it greeted the first.

Investors dumped stocks Wednesday in one of the sharpest sell-offs of the year. With the election only hours behind them, they focused on big problems ahead in Washington and across the Atlantic Ocean.

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 Jan. 1.

In Europe, leaders warned that unemployment could remain high for years, and cut their forecasts for economic growth for the rest of this year and 2013. The head of the European Central Bank said not even powerhouse Germany is immune.

The Dow Jones industrial average plummeted as much as 369 points, or 2.8 percent, in the first two hours of trading. It recovered steadily in the afternoon, but remained down 279 points with a half-hour of trading to go.

"It does look ugly," said Robert Pavlik, chief market strategist at Banyan Partners LLC. He said it was hard to untangle the impact of Europe-related selling from nerves about the nation's fiscal uncertainty.

"It's a combination of all that, quite honestly," Pavlik said.

It was the worst day for the market in a year, but not the worst day 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 and less costly regulation if Mitt Romney had won the election.