* Energy shares weak after election result
* Investors turn focus to looming fiscal cliff
* Dow off 2.3 pct, S&P 500 off 2.2 pct, Nasdaq off 2.3 pct
By Caroline Valetkevitch
NEW YORK, Nov 7 U.S. stocks fell 2 percent on
Wednesday, putting the S&P 500 on track for its biggest drop
since June, as investors' focus shifted from President Barack
Obama's re-election to the looming fiscal showdown and whether
it could create another U.S. recession.
Energy, healthcare and the banking sectors ranked among the
hardest hit after Obama defeated Republican Mitt Romney, whose
policy positions favored those industries. Defense shares also
Investors worry that Washington is headed for a long and
bitter debate over some $600 billion in spending cuts and tax
increases due to kick in next year. Many fear certain changes
could derail the economic recovery, with that perception behind
the "fiscal cliff" nickname.
"Traders on the floor are thinking: 'Before the election,
President Obama wasn't able to resolve the fiscal cliff, so what
makes you think he's going to be able to do it after the
election?' That's the big issue right now," said Todd
Schoenberger, managing principal at the BlackBay Group in New
The sell-off in the United States was compounded by
concerns in Europe, a key market for many U.S. companies. The
euro-zone economy will barely grow next year, but pick up in
2014, the European Commission said. The region's economy would
grow only 0.1 percent in 2013 after a bigger than previously
forecast contraction this year.
The Dow Jones industrial average was down 305.88
points, or 2.31 percent, at 12,939.80. The Standard & Poor's 500
Index was down 31.49 points, or 2.20 percent, at
1,396.90. The Nasdaq Composite Index was down 69.66
points, or 2.31 percent, at 2,942.27. The S&P 500 also below the
key 1,400 level for the first time since Sept. 4.
Wednesday's drop is a reversal from the previous session's
gains when voting was under way. Defense and energy shares were
among the market leaders that day, causing speculation that some
investors were betting on a Romney win.
"The market is telling us that it was pricing in the
potential for a Romney victory, based upon the rally over the
past few days," said Phil Orlando, chief market strategist for
equities at Federated Investors Inc of Pittsburgh.
On Wednesday, an index of defense shares was down 3.8
percent, its biggest one-day drop in a year. Shares of United
Technologies were down 3.5 percent at $77.14.
Among sectors, the S&P energy index lost more than 3
percent on investors' fears that companies in the sector will
likely see more regulation in Obama's second term, with less
access to federal lands and water.
Other decliners in the energy area included Arch Coal
, down 13.3 percent at $7.50, and Alpha Natural Resources
, off 12.8 percent at $8.39.
Healthcare stocks also fell, as President Obama's
re-election rules out the possibility of a wholesale repeal of
his healthcare reform law, but questions remain as to what parts
of the domestic policy will be implemented. The S&P health care
index lost 2.5 percent.
The S&P financial index fell 3.1 percent and shares
of Bank of America slid 5.5 percent to $9.39.
In 2008, stocks also rallied on election day, but then fell
by the largest margin on record for a day following the vote,
with each of the three major U.S. stock indexes posting losses
ranging from 5 percent to 5.5 percent.
Among individual stocks, Apple was the biggest drag
on the S&P 500, falling 3.2 percent to $561.40. The shares fell
as low as $556.04, their lowest in five months.