Wall Street greeted a second Obama term the way it greeted the first.
Investors dumped stocks Wednesday in the sharpest sell-off of the year. With the election only hours behind them, they focused on big problems ahead in Washington and across the Atlantic.
Frantic selling recalled the days after Obama's first victory, as the financial crisis raged and stocks spiraled downward.
Four years later, American voters returned a divided government to power and left investors fretting about a package of tax increases and government spending cuts that could stall the economic recovery unless Congress acts to stop it by Jan. 1.
The Dow Jones industrial average plummeted as much as 369 points, or 2.8 percent, in the first two hours of trading. It recovered steadily in the afternoon, but slid into the close and ended down 313, its biggest point drop since a year ago.
The economy Obama faces: Slow but gaining steadily
WASHINGTON (AP) — Some reward.
Here's the assignment President Barack Obama has won with his re-election: Improve an economy burdened by high unemployment, stagnant pay, the European financial crisis, slowing global growth and U.S. companies still too anxious to expand much.
And, oh yes, an economy that risks sinking into another recession, if Congress can't reach a budget deal to avert tax increases and deep spending cuts starting in January.
Yet the outlook isn't all grim. Signs suggest that the next four years will coincide with a vastly healthier economy than the previous four, which overlapped the Great Recession.
EU: Eurozone recession to be worse, rebound slower
BRUSSELS (AP) — Europe's economy is still reeling and unemployment could remain high for years despite the progress made in solving the debt crisis, the European Union warned Wednesday, as it downgraded next year's forecasts for the 27-country bloc.
The European Commission, the executive arm of the EU, on Wednesday revised downward its forecast for the region's gross domestic product, which it now expects will grow by just 0.4 percent in 2013, compared to its expectations this spring of 1.3 percent growth.
The commission previously expected the 17 countries that use the euro to find their footing next year, with 1 percent growth. Now it predicts only a 0.1 percent uptick.
More student loans boost consumer credit $11.4 billion
WASHINGTON (AP) — Americans took out more student and auto loans in September to boost consumer borrowing to a record level. But they cut back on credit card borrowing, a sign many remain cautious about taking on high-interest debt.
Total consumer borrowing rose $11.4 billion in September compared with August, the Federal Reserve said Wednesday. Total consumer debt outstanding, which excludes mortgages and other housing-related borrowing, stands at $2.74 trillion — the highest level on record.
The increase was driven entirely by a category that consists mostly of student and auto loans. Borrowing in that category increased $14.3 billion. Credit card borrowing fell $2.9 billion, the third drop in four months.
Kraft's profit rises as it embraces startup spirit
NEW YORK (AP) — Kraft Foods is embracing the spirit of a startup and betting that innovation will help it grow, as the maker of household names such as Oscar Mayer, Miracle Whip and Velveeta looks to redefine itself after splitting from its more glamorous global snack foods business.
The company, which was established in 1903, said Wednesday that its net income rose 13 percent in the third quarter, as a mix of new products, increased advertising and productivity improvements lifted results. But the company cautioned that there were limitations to the conclusions that could be drawn from the comparison with last year, before the companies split. Although it stood by its outlook for 2013, Kraft said revenue in the fourth quarter should be flat or down as it prunes less profitable products and continues incurring restructuring costs.
The results are the first since Kraft Foods Group Inc., based in Northfield, Ill., split with its snack food business. That company, called Mondelez International Inc., has brands with global appeal — including Oreo, Cadbury and Nabisco — and is expected to grow faster than Kraft.
Time Warner 3Q earnings up on cable TV strength
NEW YORK (AP) — Time Warner said Wednesday that its third-quarter earnings grew 2 percent, as a strong performance in its cable television channels offset declines in the Warner Bros. movie business following the final Harry Potter movie last summer.
Net income was $838 million, or 86 cents per share, higher than the 82 cents expected by analysts surveyed by FactSet. That compares with $822 million, or 78 cents a share, a year ago.
Revenue fell 3 percent to $6.84 billion, short of the $6.89 billion expected.
CBS 3Q earns beats analysts' views, revenue comes up short
NEW YORK (AP) — Broadcaster CBS Corp. says its third-quarter earnings rose 16 percent from a year ago as revenue inched higher, helped by higher fees from TV distributors.
Advertising revenue fell due to poor results from CBS Radio and the impact of having programs pre-empted by the Republican and Democratic national conventions.
Net income in the three months to Sept. 30 rose to $391 million, or 60 cents per share. That's up from net income of $338 million, or 50 cents per share, a year ago.
Macy's 3Q net income rises, but Sandy impact looms
NEW YORK (AP) — Macy's Inc. sent out a mixed message: It raised its annual profit guidance but told investors Wednesday that Superstorm Sandy would temper the start of the holiday season.
The department store chain's fourth-quarter profit forecast was below analysts' expectations, and it noted that this month's business would be negatively impacted by Sandy. That puts more pressure on December and January to achieve sales goals.
The guidance came as Macy's posted a 4.3 percent increase in third-quarter net income, helped by its efforts to tailor merchandise to local markets and bring in exclusive trendy brands.
With another storm, airlines take no chances
NEW YORK (AP) — Major airlines scrapped flights in and out of the New York area Wednesday as the region was socked with the second significant storm in a little more than a week.
United and American suspended operations in the region by afternoon, as white-out conditions developed. Other airlines cancelled flights, too. All are encouraging passengers to reschedule and are allowing them to do it for free.
Airlines are quick to cancel flights ahead of major storms to avoid stranding aircraft and crews. Doing so also lessens storm-related financial losses. About 1,300 U.S. flights had been canceled on Wednesday afternoon, according to flight tracker FlightAware. About 40 percent of those were at Newark Liberty International Airport — which was also the hardest hit with Superstorm Sandy last Monday. Most of those cancellations were made well before the first snowflake fell.
By The Associated Press(equals)
The Dow Jones Industrial average closed
The Dow Jones industrial average closed down 312.95 points, or 2.4 percent, at 12,932.73. The Standard & Poor's 500 index fell 33.86 points, or 2.4 percent, to 1,394.53. The Nasdaq composite index lost 74.64 points, or 2.5 percent, to 2.937.29.
Benchmark oil fell $4.27, or 4.8 percent, to finish at $84.44 per barrel in New York. Brent crude fell $4.25, or 3.8 percent, to finish at $106.82 per barrel in London.
Wholesale gasoline dropped 11 cents, or 4.1 percent, to end at $2.5889 per gallon. Heating oil dropped 9.08 cents, or 3 percent, to finish at $2.9621 per gallon. Natural gas dropped 3.9 cents to end at $3.578 per 1,000 cubic feet.