NEW YORK — U.S. stocks had their biggest weekly decline since June as President Barack Obama’s re-election set up a budget showdown with the Republican-controlled House of Representatives.
All 10 groups in the Standard & Poor’s 500 Index dropped during the week. Utilities and phone companies fell the most amid concern the dividend tax may rise. Bank of America led financial shares down 3.1 percent and coal companies including Peabody Energy slid on bets Obama’s re-election will mean more regulation. Hospitals such as HCA Holdings rallied while insurers fell on speculation Obama will preserve the health-care overhaul he championed.
The S&P 500 dropped 2.4 percent to 1,379.85 for the week. The Dow Jones Industrial Average slipped 277.77 points, or 2.1 percent, to 12,815.39. While both gauges capped their worst week since June 1, they’re still up 9.7 percent and 4.9 percent, respectively, for the year.
“A win by the president and some senator races has raised the potential for more regulation and higher tax rates,” said John Fox, who helps manage $1.5 billion at Fenimore Asset Management in Cobleskill, N.Y. “We live in an era of computerized trade where once you get the momentum in one direction, it kind of continues on.”
The Dow dropped 3.3 percent over two days after the election as concern intensified that a split Congress will delay a resolution over the so-called fiscal cliff. The performance was the second-worst post-Election Day selloff on record, following the 9.7 percent plunge in the two days after Obama won his first term in 2008 at the height of the credit crisis, according to data compiled by Bloomberg.
Stocks rebounded on Friday as confidence among U.S. consumers climbed to a five-year high in November.
The fiscal cliff refers to about $607 billion of tax increases and federal spending cuts set to kick in automatically in January. The Congressional Budget Office has said the U.S. economy would slow by as much as 0.5 percent next year if Congress fails to keep the increases from taking effect.
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