Stocks plunge after election; Europe woes deepen

NEW YORK (AP) - With the election now behind, investors shifted attentions to the challenges facing the U.S. and global economies. Analysts say the risk of the looming "fiscal cliff", a series of tax hikes and spending cuts set to take effect at the first of the year, is weighing on the market mood.

Stocks declined from the opening bell on Wall Street. At midday, the Dow was down more than 300 points. The key stock market averages were down more than 2 percent.

Energy and banking stocks have seen some of the biggest declines. Those are industries that might have faced less regulation if Mitt Romney had won.

Stocks seen as benefiting from President Barack Obama's decisive win rose. They included hospitals, free of the threat that Romney would have rolled back Obama's health care law.

Fitch Ratings warns Obama must get deficit deal

Fitch Ratings says President Barack Obama must pivot off his re-election victory and quickly forge an agreement with Congress to prevent a series of tax increases and spending cuts that kick in next year.

The credit rating agency issued a statement saying the president will have "No Fiscal Honeymoon." Fitch says Obama must work toward a credible plan to avoid the so-called fiscal cliff or risk losing the federal government's top 'AAA' rating next year.

The agency changed its outlook for the U.S. rating to negative last year after Congress and the Obama administration failed to meet a deadline for a plan. They face $600 billion in tax increases and spending cuts that go into effect on Jan. 1.

The government's failure to come up with a plan to reduce the deficit led Standard & Poor's to cut its rating of long-term U.S. Treasury securities last year from 'AAA' to 'AA+'. It was the first-ever downgrade of U.S. government debt.

Fitch says Obama and Congress also must reach a deal on raising the nation's borrowing limit.

Treasury Department officials have said they expect the government to hit the current borrowing limit of nearly $16.4 trillion at the end of the year unless Congress votes to increase it. The U.S. debt stood at $16.16 trillion as of Oct. 31.

The U.S. has never failed to meet its debt obligations. The battle over raising the debt limit in August 2011 went to the last minute before a compromise was reached.

EU: Eurozone recession to be worse, rebound slower

The European Union warns that Europe's economy is still reeling and unemployment could remain high for years despite the progress made in solving the debt crisis. It has downgraded next year's forecasts for the 27-country bloc.

The European Commission, the executive arm of the EU, has revised down its forecast for the region's gross domestic product. It now looks for GDP growth of 0.4 percent in 2013, compared to its expectations last spring of 1.3 percent growth.

The commission had previously expected the 17 countries that use the euro to find its footing next year, with 1 percent growth. Now it predicts only a 0.1 percent uptick.

The report also suggests that unemployment won't start falling until 2014 - and then only slightly.

The downbeat forecast helped erase an initial euphoria in markets over President Barack Obama's re-election, with markets in France and Germany losing more than 1 percent.

The eurozone has made progress this year toward resolving its debt crisis, which has been dragging down economies throughout the EU and beyond. Countries that use the euro have slashed spending and promised to keep their deficits in check. They've vowed to better protect their banks by improving how they're regulated and supervised. The European Central Bank has put in place a plan to help countries struggling with high borrowing costs, the hallmark of the crisis and the reason some have sought bailouts.

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