Dow takes post-election plunge

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By Patrice Hill

Signs that the economy is rapidly deteriorating put an end to celebrating over the presidential election in the stock market Wednesday, sending the Dow Jones Industrial Average plunging nearly 500 points.

News that the economy's vast service sector fell deeply into recession territory last month, while as many as 200,000 jobs likely were lost, renewed fears among investors of a prolonged and nasty downturn.

The Dow and other major indexes all fell more than 5 percent, with the Dow landing down 486 points at 9,139. The marketwide drop was the largest to follow any presidential election in the United States, following a nearly 300-point gain in the Dow on Tuesday that was the largest-ever gain on an election day.

Stocks fell initially as investors cashed in gains after a six-day run that lifted the Standard & Poor's 500 index more than 18 percent. But the selling picked up momentum as the market worried anew about the weakness of the economy and pondered what an Obama administration might do.

"We had an election yesterday; that doesn't mean the problems go away," said Kevin Rendino, a Plainsboro, N.J.-based money manager at BlackRock Inc. "We still have an economic slowdown."

"What is happening in the market is a continuation of really the last few weeks," said Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto. "The markets are still incorporating the slowdown in the global economy."

"I would put what we're seeing today not so much as disappointment about policy from the incoming administration and more about continuing to incorporate assessments about how weak economies are," he said.

Investors were growing uneasy in advance of the Labor Department's October employment report, to be issued on Friday. Economists on average expect a 200,000 drop in payrolls, according to Thomson/IFR.

Foreshadowing Friday's job news, a report by ADP Employer Services showed companies cut jobs by 157,000 in October, the most since November 2002. Employers have been slashing jobs after a freeze-up in the credit markets crippled many companies' ability to get financing.

The market also was spooked by a report from the Institute for Supply Management showing the services sector fell into recession last month. Most Americans are employed in services, and many companies are being forced to the edge of bankruptcy and are rapidly shedding jobs.