Dow slumps 313 after Obama’s re-election
Investors fear failure to fix the fiscal cliff will lead to recession.
A day after President Barack Obama won a second term, stocks suffered their worst beating in nearly a year.
Late selling caused to the Dow Jones Industrial Average ($INDU -2.36%) to finish down more than 300 points, its largest loss since Nov. 9, 2011. The blue-chip index ended the day below 13,000 for the first time since Aug. 2, and the major U.S. averages were all down about 2.4%.
Bank stocks were the weakest sector in part because it’s likely the Dodd-Frank financial reform bill will remain largely intact. In addition, Elizabeth Warren, a critic of many U.S. banking practices, won a seat in the U.S. Senate. JPMorgan Chase (JPM -5.60%), a critic of bank regulation, was down $2.32 to $40.56. Health insurance stocks were lower because the Patient Protection and Affordable Care Act Reform Act — aka Obamacare — is likely to stay in place.
Meanwhile, oil prices fell back sharply in part because of worries about global demand. Europe became a worry after European Central Bank President Mario Draghi said he expected no change to the weak eurozone economy in the near future. Worse, he said, the weakness has begun to affect Germany. European stocks immediately sold off — and sharply, too. The dollar rose against the euro and British pound.
The Dow closed down 313 points to 12,932, its lowest close since July 26. The Standard & Poor’s 500 Index ($INX -2.37%) slumped 34 points to 1,395, its first close below 1,400 since Aug. 6. The Nasdaq Composite Index ($COMPX -2.48%) dropped 75 points to 2,946, its biggest loss since Nov. 9, 2011
To handle yourself, use your head; to handle others, use your heart.