Wall Street greeted a second Obama term the way it greeted the first.
Investors dumped stocks Wednesday in the sharpest selloff of the year. With the election only hours behind them, they focused on big problems ahead in Washington and across the Atlantic Ocean.
Frantic selling recalled the days after Obama's first victory, as the financial crisis raged and stocks spiraled downward.
Four years later, American voters returned a divided government to power and left investors fretting about a package of tax increases and government spending cuts — the fiscal cliff — that could stall the economic recovery unless Congress acts to stop it by Jan. 1.
"Obama's re-election does not change the bigger economic or fiscal picture," Paul Ashworth of Capital Economics, an economic research company, said in a note to clients.
In Europe, leaders warned that unemployment could remain high for years, and cut their forecasts for economic growth for this year and 2013. The head of the European Central Bank said not even powerhouse Germany is immune.
"It does look ugly," said Robert Pavlik, chief market strategist at Banyan Partners. He said it was hard to untangle the impact of Europe-related selling from nerves about the nation's fiscal uncertainty.
"It's a combination of all that, quite honestly," Pavlik said.
The Dow closed down 312.95 points, or 2.4 percent, at 12,932.73 — its first close below 13,000 since Aug. 2. The Standard & Poor's 500 index fell 33.86 points, or 2.4 percent, to 1,394.53 That was the broader index's first close below 1,400 since Aug. 30. The Nasdaq composite index lost 74.64 points, or 2.5 percent, to 2.937.29.
It was the worst day for stocks this year, but not the worst after an election. That distinction belongs to 2008, when Barack Obama was elected at the depths of the financial crisis. The Dow fell 486 points the next day.
This time, energy companies and bank stocks took some of the biggest losses. Both industries would have faced lighter, less costly regulation if Mitt Romney had won the election.
Stocks seen as benefiting from Obama's decisive re-election rose. They included hospitals, suddenly free of the threat that Romney would roll back Obama's health care law.
With the 2012 election over in the United States, traders turned to Europe's increasingly sickly economy, dragged down by a debt crisis for more than three years. The 27-country European Union said unemployment there could remain high for years.
The European Commission, the executive arm of the EU, said that it expects the region's economic output to shrink 0.3 percent this year. In the spring, the group predicted no change.
Renewed focus on European economic problems also pushed the price of oil down $4.27 per barrel, its biggest decline of the year, to finish at $84.44, the lowest since July 10.