NEW YORK — So much for Wall Street's postelection afterglow.
A day after racking up their largest-ever election-day gains, stock prices crumpled Wednesday as discouraging employment data turned investors' gaze from Barack Obama's historic victory to the prosaic realities of a still-sliding economy.
The Dow Jones industrial average skidded almost 500 points -- more than washing out Tuesday's 305-point advance -- as investors faced the likelihood that daily economic numbers would remain gruesome for months to come.
"People have been kind of pie-eyed because the election took the market's attention off earnings and the employment situation," said Chris Johnson, chief executive of Johnson Research Group in Cincinnati. "Now we're coming out the other side of the election, we know who's in office and we're getting smacked in the side of the head. It's back to reality."
The sell-off was by far the biggest decline the day after a presidential election. However, it was magnified by the strong rise in stocks leading up to the vote. The Dow had rallied 18% in the six previous trading days.
Obama's decisive victory didn't play a part in the market's slide, because it had long been expected, analysts said. However, the sell-off underscored the scramble taking place across Wall Street as investors attempt to figure out how his presidency would affect business and the economy.
Though Obama outlined the broad contours of his planned economic policies during the race -- including moves that Wall Street typically disdains, such as increases in income and capital-gains taxes on the wealthy -- investors are questioning how much of his agenda he can pursue amid the financial crisis.
Some doubt that Obama will raise taxes early in his presidency -- or that Congress would support him if he tried -- because of fears that such a move would deepen the economic downturn.
"A lot of the election rhetoric will be postponed for 12 to 18 months at a minimum," said Bruce Bittles, strategist at Robert W. Baird & Co.
Investors want Obama to demonstrate that he is focused on the financial crisis and has "a sense of perspective on the scope of the issue," said Ed Kerschner, strategist at Citi Global Wealth Management.
Wall Street didn't make it easier for him Wednesday.
The Dow slumped 486.01 points, or 5%, to 9,139.27. The Standard & Poor's 500 index fell 52.98 points, or 5.3%, to 952.77 and the Nasdaq composite index tumbled 98.48 points, or 5.5%, to 1,681.64.
