Postelection, Dow falls 486 points

NEW YORK - A case of postelection nerves sent stocks plunging yesterday as investors absorbed a stream of bad economic news and wondered how a Barack Obama presidency would help the country weather a possibly severe recession. Volatility returned to the market, with the Dow Jones industrials falling nearly 500 points and all the major indexes tumbling more than 5 percent.

Beyond broad economic concerns, worries about the financial sector intensified after the Goldman Sachs Group Inc. reportedly 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. The cuts were first reported last month. Goldman fell 7.97 percent, while other financial names also fell; Citigroup Inc. dropped 13.96 percent.

Commodities stocks also fell after steelmaker Arcelor Mittal, which has operations in Coatesville and Conshohocken, said it would slash production because of weakening demand. Its stock plunged 21.51 percent.

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 to help it.

Late-day selling by hedge funds helped deepen the market's losses during the last hour.

The Dow fell 486.01, or 5.05 percent, to 9,139.27. The S&P 500 index 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.

Obama's victory means that industries such as oil and gas producers, utilities and pharmaceuticals may face greater regulation and even taxes, while labor unions and automakers are expected to benefit.

In addition, banks, insurance companies, hedge funds, and the rest of the financial sector will almost certainly face attempts at a regulatory overhaul by the Democratic Congress next year.

Bank of America Corp. dropped $2.78, or 11.33 percent, to $21.75. Citigroup fell $2.05, or 13.96 percent, to $12.63. Morgan Stanley, meanwhile, tumbled $1.84, or 9.74 percent, to $17.06. Goldman Sachs fell $7.57, or 7.97 percent, to $87.43.

Investors also continue to heed the state of the credit markets. The paralysis in the credit markets that began after the bankruptcy of Lehman Bros. Holdings Inc. in mid-September has been alleviated somewhat by government interventions, but they still show some signs of strain.

Banks continued to ratchet down the rates they charge one another for borrowing yesterday, but the key interbank lending rate - the London Interbank Offered Rate, or LIBOR - remains well above the Federal Reserve's target interest rate of 1 percent. LIBOR for three-month dollar loans fell to 2.51 percent from 2.71 percent Tuesday.

Other sectors that are being closely watched in light of the election results are pharmaceuticals and alternative energy, analysts said.

Merck & Co. Inc. fell $2.41, or 7.74 percent, to $28.72. Pfizer Inc. dipped $1.09, or 6.03 percent, to $17.00. Suntech Power Holdings Co. Ltd. was among the alternative-energy stocks that declined, falling $3.88, or 19.18 percent, to $16.35.