North American stocks were on track for their biggest tumble in about a year in midday trading on Wednesday, a day after Americans re-elected Barack Obama to a second term as President.
Shortly after noon, the Dow Jones industrial average was down 329 points or 2.5 per cent, to 12,916. The broader S&P 500 was down 34 points or 2.4 per cent, to 1394 – marking the biggest one-day selloff since November 2011.
In Canada, the S&P/TSX composite index was down 132 points or 1.1 per cent, to 12,229.
The dip follows U.S. election results from Tuesday evening, which handed Mr. Obama a second term in the White House, along with proposals for higher taxes and greater industry regulation.
But results also ensured ongoing political gridlock in Washington with Republicans maintaining control of Congress – widely seen by market watchers as the worst-case scenario for stocks because it makes the upcoming fiscal cliff much more dangerous.
Mr. Obama must negotiate with Congress to avert automatic tax increases and spending cuts next year, a toxic mix that could shave up to 5 per cent from U.S. gross domestic product.
However, the election results were hardly a surprise. Polls had shown a tight race but various other indicators had been pointing to a Democratic victory in the White House.
The stock market declines were broad, affecting all 10 subindexes within the S&P 500. Economically sensitive areas of the market were among the biggest casualties: Financials and energy stocks fell 3.1 per cent each, industrials fell 2.6 per cent and tech stocks fell 2.5 per cent.
Within Canada's benchmark index, energy stocks fell 2 per cent, materials fell 1.4 per cent and financials fell 0.9 per cent.
Commodities were hit. Gold fell to $1,712 (U.S.), down $4 and erasing a gain earlier in the session. Crude oil fell to $85.18 a barrel, down $3.53, or its biggest dip in about a month.
In Europe, major indexes also declined. The U.K.'s FTSE 100 fell 1.6 per cent and Germany's DAX index fell 2 per cent.
David Berman