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Why the Dow's Plunging After the Election

By Dan Caplinger - Nov 7, 2012 at 11:00AM

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A brief look at the market's moves so far today.

Yesterday the stock market rallied, with many investors believing it simply represented relief that the end of the long campaign was at hand. But judging from today's market action, it seems investors were ignoring the pre-election polling data and hoping for a Romney victory, because now that those hopes have faded, stocks are plunging, giving up all of yesterday's gains and much more. European Central Bank President Mario Draghi didn't help matters, again noting that the weakness in Europe's economy isn't likely to go away anytime soon. As of 11 a.m. EST, the Dow Jones Industrials ( ^DJI 1.40% ) are down 299 points, with the broader markets down around 2% as well. All 30 Dow stocks fell.

Big banks were hit hardest among Dow components, with Bank of America ( BAC 1.27% ) falling more than 5% and JPMorgan Chase ( JPM 1.50% ) down about 4.5%. Fears that a Democratic administration will continue along the lines of more stringent regulation weighed on bank stocks across the industry. Yet given the recovery that most banks have seen, due in large part to signs of life in the beaten-down housing market, the knee-jerk election reaction could well prove to be a buying opportunity.

UnitedHealth ( UNH 1.00% ) also fell sharply, sinking 4.3% as the future of the Affordable Care Act now appears to be assured. With some states having waited to see whether the health care law would survive a potential change in the Oval Office, UnitedHealth and its health insurance peers will need to move forward with steps to comply with the new law as more of its provisions take effect.

Finally, ExxonMobil ( XOM 1.12% ) lost 3.2% on a generally bad day for energy stocks. An Iraqi oil ministry official acknowledged reports that the oil giant is trying to get out of its West Qurna oil field development project in southern Iraq. The company created some controversy when it sought to conduct energy exploration in the Kurdish region of the country in late 2011, and Exxon's move may be in response to that controversy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$35,719.43 (1.40%) $492.40
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$44.71 (1.27%) $0.56
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$162.57 (1.50%) $2.41
Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$62.27 (1.12%) $0.69
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$464.73 (1.00%) $4.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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