- Waller deemed competent to stand trial (1/11/17)5
- Young Elvis impersonator from Bernie performs on 'Ellen DeGeneres Show' (1/12/17)
- Two subjects of interest in 1992 homicide to take polygraph tests (1/15/17)7
- 113 drug tests at Jackson High net one instance of illicit usage (1/11/17)15
- Two men shot after argument; houses also struck by bullets (1/12/17)21
- Business notebook: Jackson salon owner also opens a clothing store (1/16/17)
- Cape SportsPlex contractor offers a look at the project (1/15/17)14
- Two Cape men recovering after shooting (1/13/17)
- Imo's Pizza will be added to Rhodes 101 convenience store in Jackson (1/10/17)16
- Wallingford proposes bill to collect sales taxes on online purchases (1/11/17)30
Stocks plunge as recession worries resurface
NEW YORK -- A case of postelection nerves sent Wall Street plunging Wednesday as investors looked past Barack Obama's presidential election and returned to fears of a deep and protracted recession.
The Dow Jones industrials fell nearly 500 points, and all the major indexes tumbled more than 5 percent.
The slide ended the best stretch since the financial meltdown began in mid-September, following a run-up last week that lifted the Standard & Poor's 500 index more than 18 percent and gave the Dow its best weekly advance in 34 years. The market had been expected to give back some gains, however, and analysts had warned that Wall Street faced more turbulence.
"The market has really gotten ahead of itself and falsely priced in that this recession wasn't going to be as prolonged as thought," said Ryan Larson, head of equity trading at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher. "Regardless of who won the White House, these problems are not going away.
"We're in a really bad recession, period," he said. "People are locking in profits and realizing we're not out of the woods."
Worries about the financial sector intensified after Goldman Sachs Group Inc. began notifying about 3,200 employees globally that they had lost their jobs as part of a plan to slash 10 percent of its work force.
The cuts were first reported last month. Goldman fell 8 percent, while other financial names also fell. Citigroup Inc. dropped 14 percent.
Commodities stocks also fell after steelmaker ArcelorMittal said it would slash production because of weakening demand. Its stock plunged 21.5 percent.
The market expected Obama to win the election, but as the session wore on, investors clearly worried about the weakness of the economy and pondered what the new administration might do.
Analysts said the market is already anxious about Obama's upcoming selections for Treasury secretary and other Cabinet positions.
"The celebration is over. Today we saw a bit of reality," said Al Goldman, chief market strategist at Wachovia Securities in St. Louis. "President-elect Obama is coming into a situation with limited experience, having to handle an economy in serious trouble, a couple of wars and terrorism. It's an extremely tough job."
Late-day selling by hedge funds helped deepen the market's losses during the last hour. More selling by the funds is expected to weigh on the market ahead of a Nov. 15 cutoff for shareholders to notify fund managers of their intent to cash out investments before year-end.
The Dow fell 486.01, or 5.05 percent, to 9,139.27. The blue chips had risen more than 300 on Tuesday, and last week rose 11.3 percent, their biggest weekly gain since 1974.
The S&P 500 index fell 52.98, or 5.27 percent, to 952.77. Through the six sessions that ended Tuesday, the index, the one most closely watched by market professionals, rose 18.3 percent.
Goldman said trading could remain turbulent as investors assess the shape and direction of Obama's forthcoming economic policies.
"The market has to go through a period of figuring out if they are going to gain confidence in Obama and the Congress or lose it," he said.
Obama's victory means that industries such as oil and gas producers, utilities and pharmaceuticals may face greater regulation and even taxes, while labor unions and automakers are expected to benefit.
Meanwhile, banks, insurance companies, hedge funds and the rest of the financial sector will almost certainly face attempts at a regulatory overhaul by the more heavily Democratic Congress.
Investors are also watching pharmaceuticals and alternative energy sectors and credit markets. The paralysis in the credit markets that began after the bankruptcy of Lehman Brothers Holdings Inc. has been alleviated somewhat by a series of government interventions, but the markets still show signs of strain.
Banks continued to ratchet down the rates they charge one another for borrowing on Wednesday, but the key interbank lending rate -- the London Interbank Offered Rate, or Libor -- remained well above the Federal Reserve's target interest rate of 1 percent. Libor for three-month dollar loans fell to 2.51 percent from 2.71 percent Tuesday.
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