NEW YORK (Reuters) – Stocks fell 2 percent on Wednesday, putting the S&P 500 on track for its biggest drop since June, as investors’ focus shifted from President Barack Obama’s re-election to the looming fiscal showdown and whether it could create another U.S. recession.
Energy, healthcare and the banking sectors ranked among the hardest hit after Obama defeated Republican Mitt Romney, whose policy positions favored those industries. Defense shares also plunged.
Investors worry that Washington is headed for a long and bitter debate over some $600 billion in spending cuts and tax increases due to kick in next year. Many fear certain changes could derail the economic recovery, with that perception behind the “fiscal cliff” nickname.
“Traders on the floor are thinking: ‘Before the election, President Obama wasn’t able to resolve the fiscal cliff, so what makes you think he’s going to be able to do it after the election?’ That’s the big issue right now,” said Todd Schoenberger, managing principal at the BlackBay Group in New York.