NEW YORK — A case of post election nerves sent Wall Street plunging Wednesday as investors, looking past Barack Obama’s presidential victory, returned to their fears of a deep and protracted recession. Volatility swept over the market again, with the Dow Jones industrials falling nearly 500 points and all the major indexes tumbling more than 5 percent.
The market was widely expected to give back some gains after a run-up that lifted the Standard & Poor’s 500 index more than 18 percent and gave the Dow its best weekly advance in 34 years; moreover, many analysts had warned that Wall Street faced more turbulence after two months of devastating losses.
But investors lost their recent confidence about the economy and began dumping stocks again.
“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. People are locking in profits and realizing we’re not out of the woods.”
Beyond broad economic concerns, worries about the financial sector intensified after Goldman Sachs Group Inc. began to notify about 3,200 employees globally that they have lost their jobs as part of a broader plan to slash 10 percent of the investment bank’s workforce, a person familiar with the situation said.
Although the market expected Obama to win the election, as the session wore on, investors were clearly worrying about the weakness of the economy and pondered what the Obama administration might do.
“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.”
The Dow fell 486.01, or 5.05 percent, to 9,139.27. The blue chips had risen more than 300 Tuesday, and last week rose 11.3 percent, their biggest weekly gain since 1974.
The S&P 500 fell 52.98, or 5.27 percent, to 952.77.
The Nasdaq composite index fell 98.48, or 5.53 percent, to 1,681.64, while the Russell 2000 index of smaller companies fell 31.33, or 5.74 percent, to 514.64.
Asian stock markets tumbled today, with Japan’s Nik kei stock average retreating 5.7 percent to 8,980.18 and Hong Kong’s Hang Seng Index losing 6.7 percent to 13,842.99. South Korea’s benchmark Kospi index broke a five-session winning streak to dive 7 percent. Markets in Singapore, Australia and mainland China also fell.
