Wall St greets Obama win with 2.4% plunge

US stocks plunged 2.4 percent Wednesday after President Barack Obama's re-election victory set up a tough battle with Republicans over the looming "fiscal cliff". The end of a long, hard-fought battle with Republican Mitt Romney was rewarded with a steep sell-off, despite Wall Street having recovered strongly from the recession crash since Obama took office. Romney had been favored by markets for his less-tax, less-regulation stance, but analysts said traders were worried that the still-divided Congress could again deadlock on fiscal reforms, allowing the harsh "fiscal cliff" package of spending cuts and tax hikes to take effect on January 1. "By returning a divided government to Washington, the electorate has given neither party a clear mandate to address the lackluster recovery, the fiscal cliff, and the looming debt crisis," said Brian Kessler at Moody's Analytics. "Sadly, it doesn't look as though much has changed, and reaching an agreement on the fiscal cliff may sound easier but it is not," said Hugh Johnson of Hugh Johnson Advisors. After opening sharply lower, losses on the stock indices accelerated in a tsunami of red ink. The Dow Jones Industrial Average dived 312.95 points (2.36 percent) to finish at 12,932.73, closing below 13,000 for the first time in three months. The tech-rich Nasdaq Composite shed 74.64 (2.48 percent) at 2,937.28. The S&P 500-stock index, a broad measure of the markets, skidded 33.86 (2.37 percent) to 1,394.53. Obama won a resounding victory over Republican challenger Mitt Romney for another four-year term in a closely fought race late Tuesday. But voters left Congress divided, with Democrats maintaining control of the Senate and Republicans holding the House of Representatives with less than two months before the automatic fiscal cliff is reached. Market sentiment was also pressured after the European Union slashed its eurozone economic forecast and European Central Bank chief Mario Draghi warned that the eurozone's woes were beginning to hurt Germany, the bloc's powerhouse. "The market is not just nervous because of the election, it is also very nervous because of Greece," said Michael Gayed of Pension Partners. The broad market sell-off was led by telecommunications, financial and commodities stocks. On the blue-chip Dow, Bank of America dived 7.1 percent, JPMorgan Chase shed 5.6 percent and AT&T lost 3.3 percent. The rest of the 30-stock Dow also ended in the red, including Alcoa, off nearly three percent, Caterpillar (-3.5 percent), Intel (-3.8 percent) and United Technologies (-2.9 percent). Oil heavyweights slid as crude prices fell sharply: Chevron shed 2.6 percent and ExxonMobil was down 3.1 percent. Coal producers, which were hoping for industry support if Romney won the vote, were hammered: Alpha Natural Resources plunged 12.2 percent and Arch Coal lost 12.5 percent. Defense contractors also were punished: Lockheed Martin fell 3.9 percent and Raytheon fell 3.3 percent. Media giant Time Warner was a rare gainer, adding 4.2 percent after posting quarterly earnings that beat forecasts. Pfizer dropped 1.3 percent despite getting FDA approval for its rheumatoid arthritis drug Xeljanz. On the Nasdaq, heavyweight Apple dropped 3.8 percent and Facebook lost 3.3 percent. Bond prices jumped as investors fled equities. The 10-year US Treasury yield fell to 1.63 percent from 1.74 percent late Tuesday, and the 30-year tumbled to 2.82 percent from 2.92 percent. Prices and yields move inversely.