U.S. stocks, oil fall on global slowdown fears

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks dived and risk aversion rose on Wednesday as the financial crisis sparked a fresh round of bleak news and gave U.S. president-elect Barack Obama a grim welcome a day after his historic election.

With Obama's victory less than 24 hours old, U.S. and European equity markets tumbled and American and euro zone government debt rose in a flight to safety after data from the services sector pointed to a prolonged worldwide slowdown.

The three major U.S. equity indices all fell more than 5 percent, with the Dow pulled down the most by industrial icons Exxon Mobil, Boeing and United Technologies.

Company reports underscored the daunting task Obama faces when he takes office in January and tries to lead the United States and the world out of the worst financial crisis since the Great Depression.

"Even though there's a lot of enthusiasm and a lot of excitement around the new president, I think it's going to be very difficult for anything quick to happen," said Dean Barber, president of investment firm Barber Financial Group in Kansas City.

"Today we just had reality set in that," Barber said. "We're still losing jobs and we still have consumer spending at very low levels and we are heading into a holiday season that looks like it could be one of the worst."

The Dow Jones industrial average closed down 486.01 points, or 5.05 percent, at 9,139.27. The Standard & Poor's 500 Index was down 52.98 points, or 5.27 percent, at 952.77. The Nasdaq Composite Index was down 98.48 points, or 5.53 percent, at 1,681.64.

Finance company GMAC LLC reported a $2.52 billion loss in the third quarter, hurt by slumping housing and auto markets, and said its Residential Capital LLC mortgage unit may fail.