Stocks fell the most in a year on Wall Street following the presidential election and new worries from Europe that a broad recession there is now all but certain.
Index futures had been higher early Wednesday but reversed course after the European Union slashed its growth forecast for next year, sending European stock markets sharply lower.
The Dow Jones industrial average fell 300 points to 12,948 at 12:55 p.m. New York time. The Standard & Poor's 500 index lost 31 points to 1,396 and the Nasdaq composite was off 74 points at 2,937.
"Here we go again in Washington," Ed Yardeni, president and chief investment strategist at Yardeni Research Inc. in New York, wrote in a note today. "President Barack Obama has won a second term. While he promised last night that 'the best is yet to come,' more political storms are likely."
Among the big winners were gun makers Sturm Ruger, up 7 percent, and Smith and Wesson, up 9 percent. Banks and insurance company stocks traded sharply lower. Apple fell 3.5 percent to $559, completing a 20 percent drop from its all-time high of $705 in September.
European markets gave up early gains and turned sharply lower. Investors are also worried about what Washington will do about looming tax increases and government spending cuts.
US policymakers must deal with a host of economic issues now that the election has been decided, including $607 billion of tax increases and federal spending cuts set for January, the so-called fiscal cliff, as well as the expiration of a withholding tax cut and the looming $16 trillion federal deficit.
The European Commission, the executive arm of the EU, said that it expects the region's economic output to shrink 0.3 percent this year. In the spring, the group predicted no change.
For next year, the commission predicted 0.4 percent growth, barely above recession territory. It predicted 1.3 percent last spring.
The EU also predicted a larger decline for the 17 nations that use the euro currency: 0.4 percent this year, slightly worse than a previous estimate of a 0.3 percent decline.
ABC's Nick Schifrin reports that Greece is in the second day of a 48-hour general strike. Most of Athens is shut down and tonight the Greek parliament is voting on severe cuts across the economy that will include salary reductions. If the measure doesn't pass, Greece may go bust within weeks. If the measure does pass, massive protests are expected. The anti-immigrant, fascist party Golden Dawn is now the third most popular party in the country - despite openly targeting immigrants in the streets of Athens.
The Associated Press contributed to this report.