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Stocks on Wall Street tumbled to their lowest levels in three months as investors delivered their negative verdict on President Obama’s next four-year term.
At the close (10am NZ time), the Dow Jones Industrial Average had dropped 312.95 points, or 2.4%, to 12,932.73.
This was the blue-chip index's biggest one-day decline since November 9, 2011. It was also the Dow's lowest level since early August.
The S&P index was down 2.4% to 1394.53, with all 10 of the sectors and more than 95% of the 500 stocks losing ground.
The technology-heavy Nasdaq Composite declined 2.5% to 2937.29.
Leading the declines were energy stocks, as crude-oil futures tumbled and the outlook for coal darkened. The industry is facing regulation under the second Obama administration. Similarly affected financial stocks were also hit hard by investor concerns.
President Obama will face a divided legislature, with the Republicans retaining their majority in the Congress. This increases the likelihood of the US going over the "fiscal cliff" – a previously agreed combination of government spending cuts and revenue increases.
This is set to take place on January 1 unless the Congress reaches a compromise to avert the policy changes.
One of the key concerns for investors is a potential change in dividend tax policy, which would see taxes on dividends potentially tripling by year end for the highest-income tax brackets.
In commodities markets, gold futures slipped to about $US1710 an ounce while crude-oil futures tumbled 4% to about $US85.20 a barrel.
The US dollar moved higher against the euro but lost ground against the yen.