Traders work on the floor of the New York Stock Exchange, October 15. Stocks rose in Asia but fell in Europe and the United States Wednesday. - ap

A case of post-election nerves sent stocks lower Wednesday as investors began questioning what impact a Barack Obama presidency will have on business and the overall economy.

Asian stocks rose, but European markets fell Wednesday.

The Dow Jones industrials also fell more than 300 points and the major indexes all fell more than three per cent in early afternoon trading.

Stocks fell initially as investors cashed in gains after a six-day run that lifted the Standard & Poor's 500 index more than 18 per cent.

The selling picked up momentum as the market began to ponder what an Obama administration might do.

Obama will inherit an enormous budget deficit when he is sworn in January 20.

Analysts said that the market is already growing anxious about who Obama selects as the next Treasury Secretary, as well as who he picks for other Cabinet positions.

"A lot of the policy going forward is going to have an effect on the various sectors of the market," said Joe Keetle, senior wealth manager for Dawson Wealth Management.

Obama's victory means that industries such as oil and gas producers, utilities and pharmaceuticals may face greater regulation and even taxes, while labour unions and automakers are expected to benefit.

In addition, banks, insurance companies, hedge funds and the rest of the financial sector will almost certainly face attempts at a regulatory overhaul by the Democratic Congress next year.

Analysts said the market was also growing uneasy in advance of the Labor Department's October employment report, to be issued on Friday. Economists on average expect a 200,000 drop in payrolls, according to Thomson/IFR.

Employers have been slashing jobs after a freeze-up in the credit markets crippled many companies' ability to get financing.

The market showed no reaction to the release of the Institute for Supply Management's services sector index, which fell to 44.4 in October from 50.2 in September.

Negative economic news

That's a steeper drop than the market expected, but analysts said investors have largely factored in negative economic news for the time being.

In midday trading, the Dow Jones industrial average fell 312.06, or 3.24 per cent, to 9,313.22.

The S&P 500 index fell 33.49, or 3.33 per cent, to 972.26. Through the six sessions that ended Tuesday, the index, the one most closely watched by market professionals, rose 18.3 per cent.

The Nasdaq composite index was also down by 63.54, or 3.57 per cent, to 1,716.58.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to a light 518 million shares.

- AP