Stocks plunge as service sector shrinks

The US electorate has decided on its new president but the market still doesn't seem to have decided on where to go. From Bloomberg:

The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth...

The S&P 500 tumbled 5.3 percent to 952.77, erasing yesterday's 4.1 percent rally. The Dow retreated 5.1 percent to 9,139.27. The Russell 2000 Index of small U.S. companies fell 5.7 percent to 514.64. The MSCI World Index of 23 developed markets decreased 2.5 percent to 982.98...

The market's decline came a day after the biggest presidential Election Day gain since the New York Stock Exchange first opened for trading on a voting day in 1984.

It's a bit clearer where the economy is headed though. From Reuters:

The service sector accounts for about 80 percent of U.S. economic activity. The Institute for Supply Management said its non-manufacturing index came in at 44.4 versus 50.2 in September, below the level of 50 that separates expansion from contraction and worse than economists' expectations for 47.5...

U.S. private employers cut a larger-than-expected 157,000 jobs in October in a deteriorating labor market that will get worse in the months ahead, according to a report by ADP Employer Services...

A report by outplacement firm Challenger, Gray & Christmas showed job cuts announced in October totaled 112,884, up 19 percent from September, citing evidence of widespread economic malaise as troubles that began in housing and banking infect the rest of the economy.

The data from Europe point in the same direction.

Markit's eurozone purchasing managers' index for the service sector fell to 45.8 in October -- the lowest in the survey's 10-year history -- from September's 48.4.

Year-on-year growth in retail sales in the euro zone fell 1.6 percent in September, the fourth straight month of decline.

In the UK, the service sector shrank at a record pace in October while manufacturing output fell for the seventh month in September to mark the longest stretch of monthly declines in 28 years.

The good news is that LIBOR fell yet again on Wednesday.