U.S. equities slumped on Wednesday after President Barack Obama defeated Republican challenger Mitt Romney in a tight election that retained Democrats’ control the White House and Senate, and Republicans’ hold of the House.
One source of worry to investors is the impending ‘fiscal cliff,’ referring to the $600 billion package of tax increases and spending cuts that are scheduled to kick in automatically at the end of 2012. Unless the White House and Congress reach a deal to cut the deficit, the scenario could severely strain the economy.
The stock sell-off in the U.S. was compounded by concerns in Europe, as the Greek Parliament was scheduled to vote late Wednesday on a new budget package that will allow the country to borrow 31.5 billion euros, or $40.2 billion, from the European Union and International Monetary Fund to remain solvent.
A basket of industry stocks tracked by Footwear News slipped 1.7 percent, while major indices swung to a wider loss.
The S&P 500 and Dow Jones Industrial Average both gave up 2.4 percent, dropping to 1,394.53 points and 12,932.73, respectively.
Earlier in the day, London’s FTSE 100 slipped 1.6 percent and Paris’ CAC 40 lost 2 percent.
Meanwhile, crude-oil prices also fell to the lowest level since July after the Energy Department reported rising U.S. gasoline supplies and falling demand.