Markets slid downward in the first day of trading since President Obama won reelection, as continuing concerns about Europe and the "fiscal cliff" loomed.
Obama cruised to an electoral victory Tuesday evening, but stocks opened Wednesday on a down note, with each of the three major indexes falling over 1 percent in the first minutes of trading. The Dow Jones Industrial Average was down nearly 200 points.
With the election in the rearview mirror, a divided Congress and Obama White House will now have to find a way to strike a deal on taxes and spending, after spending much of the last two years failing to find compromise. If Mitt Romney had taken the White House, it was expected that Congress would simply "punt" on the fiscal cliff, extending all existing policy into 2013 so the new president could hammer out his own deal after taking office.
Now both parties are already jockeying for position on what is expected to be a hectic lame-duck session. On Wednesday, the credit rating agency FitchRatings said Obama needed to strike a credible deficit-reduction deal, as well as raise the debt limit in a timely fashion, if the U.S. is to avoid another downgrade to its credit rating. Fitch still rates U.S. debt at top-tier, AAA quality, but has warned that it is likely to downgrade it if a deficit deal is not reached and the cliff is not averted.
Standard & Poor's became the first rater to ever downgrade the nation's credit rating, doing so last August in the wake of the high-stakes battle over raising the debt ceiling. Congress is expected to have to raise that limit again early in 2013.
Meanwhile, European officials warned that the continent's economy is expected to effectively grind to a halt in 2013, as nations there continue to grapple with a political and fiscal crisis.
The financial sector threw its support behind Romney in his presidential bid, as banks were frustrated by the slew of new regulations ushered in by Obama under the Dodd-Frank financial reform law, as well as the tough language he used to describe the financial sector. Major banks like Goldman Sachs and JPMorgan were among Romney's top contributors, after Wall Street contributed heavily to Obama's first presidential bid in 2008.