U.S. stocks fell sharply at the open Wednesday, as investors focused on how President Obama plans to avoid the fiscal cliff after he won re-election Tuesday night.
Worries about the European economy also resurfaced, putting more pressure on global markets.
Wall Street had been overwhelmingly in favor of Mitt Romney, and considered him to the more business-friendly candidate.
Investor attention is already turning to what Tuesday's results mean for the looming fiscal cliff, the market's biggest headwind, according to market strategists and money managers surveyed by CNNMoney.
If lawmakers fail to address the simultaneous onset of tax hikes and spending cuts that will be triggered on Jan. 1, they risk throwing the U.S. economy back into a recession and drive unemployment up even higher.
As investors weighed Obama's win and what it means for regulation, shares of financial companies and and energy fell sharply.
Banking giants Bank of America, Morgan Stanley and Goldman Sachs shares fell more than 3%. JPMorgan Chase and Wells Fargo also fell sharply.
Additionally, coal producer Alpha Natural Resources sank 9%, while Peabody Energy, James River Coal Co, CONSOL Energy and Walter Energy were also down. Oil companies Exxon Mobil, Chevron, and Halliburton also fell.
But hospital stocks HCA and Community Health Systems were big gainers, as Obama's win means the president's health care reform legislation is here to stay.
In Europe, European Central Bank president Mario Draghi warned that the region's debt problems are starting to take their toll on the economy in Germany, which has so far been relatively insulated.
The European Commission issued a report forecasting a quarter percentage decline in economic activity in the European Union this year, and subdued growth in 2013.
Following a morning rally, European stocks sold off in afternoon trading. Britain's FTSE 100 slipped 0.4% while the DAX in Germany and France's CAC 40 declined 1%.
Asian markets shaved morning losses after Obama's win was declared, as investors bet that the Federal Reserve is likely to stick with its current monetary policy in the near term. The Shanghai Composite and Japan's Nikkei finished little changed, while the Hang Seng in Hong Kong rose 0.7%.
A victory by Romney, who had been highly critical of Fed chairman Ben Bernanke, could have resulted in more uncertainty about the future leadership of the Fed and whether the central bank would be tougher on inflation. The Fed's low interest rates and bond buying programs have largely been credited for boosting the market during the past three years.
The dollar initially eased against the major world currencies but reversed course. The dollar rose 0.5% against the euro and 0.1% versus the British pound. The dollar declined against the Japanese yen.
Investors also continued to eye corporate news. CNNMoney parent Time Warner shares rose after the media company posted a higher-than-expected profit for the third quarter thanks to strength in its cable networks.
Shares of Macy's slipped even after the retailed topped earnings expectations and boosted its guidance for the year.
News Corp. shares gained ground after the media giant reported solid quarterly results late Tuesday.
On Wednesday afternoon, the Federal Reserve will release data on consumer credit for September, which is expected to have expanded by $10.6 billion, according to a survey of analysts by Briefing.com.
U.S. stocks finished higher Tuesday.
Commodities: Oil for December delivery fell $2.40 to $86.31 a barrel.
Gold futures for December delivery gained $5.50 to $1,720.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury edged higher, pushing the yield down to 1.63% from 1.74% late Tuesday.
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