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 Corp. (BAC) led financial shares down 3.1 percent and coal companies including Peabody Energy Corp. (BTU) slid on bets Obama's re-election will mean more regulation. Hospitals such as HCA Holdings Inc. (HCA) rallied while insurers fell on speculation Obama will preserve the health-care overhaul he championed.
The S&P 500 (SPX) 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," John Fox, who helps manage $1.5 billion at Fenimore Asset Management Inc. in Cobleskill, New York, said in a phone interview. "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 the last day of the week 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.
"The election is a reminder we have this not small issue that the fairly dysfunctional political system has not yet dealt with," Pat Dorsey, who helps manage $700 million at Sanibel Captiva Investment Advisers in Chicago, said by phone.
Signs that Europe's debt crisis is worsening helped exacerbate the slide in equities. Euro-area finance ministers may not make a decision on unlocking funds for Greece until late November as they await a report on the country's compliance with bailout terms, a European Union official said. The European Commission cut its growth forecasts for the euro area.
Utilities in the S&P 500 tumbled 4.6 percent while phone stocks sank 3.6 percent amid concern the dividend tax may increase. The two groups' dividend yield averaged 4.2 and 4.8 percent, respectively, higher than any other industries, according to data compiled by Bloomberg.
Duke Energy Corp. (DUK), the largest U.S. utility owner, slipped 4.6 percent to $61.96 while AT&T Inc. (T), the country's biggest telephone company, lost 4 percent to $33.54.
Financial companies in the S&P 500 fell 3.1 percent amid speculation Federal Reserve Chairman Ben S. Bernanke will stay on to continue his low interest-rate policy that has weighed down banks' profitability. The industry may face more restrictions as Congress prepares its first revisions to the Dodd-Frank Act enacted in response to the 2008 financial crisis.
Bank of America slipped 4.3 percent to $9.43. JPMorgan Chase & Co. (JPM) declined 4.2 percent to $40.62.
Coal producers slumped amid concern Obama will continue with a series of environmental regulations that would curb the production and use of the fuel. Peabody Energy, the largest U.S. coal miner by sales, dropped 7 percent to $26.17. Alpha Natural Resources Inc. (ANR), the second-biggest, tumbled 12 percent to $8.
First Solar Inc. (FSLR), a thin-film solar manufacturer, jumped 8.9 percent to $24.55 on optimism Obama will continue to favor clean-energy companies.
HCA, the largest for-profit hospital company, climbed 6.4 percent to $32.62 and Tenet Healthcare Corp. (THC) advanced 4.7 percent to $26.21 on prospects for millions of newly insured patients being added to their admission rolls.
Medical insurers fell as the industry faces profit limits and new taxes to help pay for the coverage expansion. UnitedHealth Group Inc. (UNH) slipped 5.6 percent to $52.90 and WellPoint Inc. (WLP) erased 8.2 percent to $56.16.
Apple Inc. (AAPL) declined 5.2 percent to $547.06 for a seventh straight weekly loss, the longest retreat since 2008. Shares of the world's most valuable company have tumbled 22 percent from a record high on Sept. 19 as the company faces more competition and struggles to make enough iPhones to meet demand.
More than 70 S&P 500 companies reported quarterly results during the week, according to data compiled by Bloomberg. Among the 452 companies that announced so far, 71 percent exceeded analysts' estimates on earnings while 60 percent missed on revenue.
"The surprise is in the lack of sales growth," Terry L. Morris, who helps oversee about $2.5 billion at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., said in a Nov. 8 phone interview. Companies "have been beating on earnings because of cost cutting. That can't go on forever," he said.
Walt Disney Co. (DIS) fell 5.6 percent to $47.06. The world's largest entertainment company reported fiscal fourth-quarter sales that missed analysts' estimates amid an ad-sales decline at the ABC network and weakening trends at cable-sports powerhouse ESPN.
Express Scripts Holding Co. plunged 14 percent to $53.35. The largest U.S. pharmacy benefits manager said analysts' profit estimates for 2013 were "overly aggressive." A "weak business climate and the unemployment outlook" may lead to a loss of members, depressed drug utilization and "increased client demands and expectations," Express Scripts said in a statement.
J.C. Penney Co. sank 13 percent to $20.64. The fourth- largest U.S. department-store company reported a third-quarter loss that was wider than analysts estimated as Chief Executive Officer Ron Johnson struggles to overhaul the company.--Courtesy of Bloomberg News