Stocks Plunge Upon Obama Re-election

Stocks plunged this Wednesday morning after President Obama was announced to be the winner of the 2012 Presidential election. Mitt Romney was considered by Wall Street to be more favorable towards business and the overall economic health of the United States.

According to ABC News, the Dow Jones industrial average plunged as much as 245 points in the first hour of trading, a 1.4 percent drop, and the Standard & Poor’s 500 index fell as much as 27, or 1.6 percent. Oil and coal companies and bank stocks took huge losses early in the trading morning. Even gold and silver ETFs are trading down sharply, which is unusual considering that Obama’s economic plans call for devaluing the dollar, which conversely causes the value of gold and silver to rise along with many other commodities including oil and gas. The yield on the 10-year Treasury note plunged to 1.64 percent from 1.75 percent late Tuesday. Even government defense contractors like Lockheed Martin and Northrop Grumman are feeling the heat.

Stocks seen as benefiting from President Obama’s plans posted huge gains. These stocks included hospitals, who benefit from the Affordable Care Act no longer being in danger of being repealed, and renewable energy companies, which have benefited from Obama’s renewable energy spending.

According to CNN, the overseas markets reacted to the news of Obama winning by gaining a little. The Asian investors are betting that the Federal Reserve will keep Bernanke and thus is likely to stick with its current monetary policy of devaluing the US dollar through its quantitative easing, or QE3, program.

For the future, investors on Wall Street are looking toward the European Union (EU), which “issued a report forecasting a quarter percentage decline in economic activity in the European Union this year, and subdued growth in 2013.” The EU’s debt crisis is even threatening economic powerhouse Germany.

The United States will also be facing its own long term debt crisis, with a $1.1 trillion deficit ending in over $16 trillion of US Federal debt. In the short term, the January automatic sequestration triggers fears that Congress will not be able to avoid the financial cliff. But investors are waiting to see whether or not the new Congress will be able to work with President Obama to pass a budget plan.

“The chances of going off the cliff probably just increased,” says Ed Yardeni, chief investment strategist at Yardeni Research, according to