Hours before the polls closed on November 4th, the S & P 500 stock index closed for the day at 1005.75 . Yesterday, after 12 trading sessions since the election results were known, the S & P closed at 752.54. That is a drop of 253 points, and 25.2%.

There has never been such a reaction to an election result in American history . The loss is 2.5 trillion dollars in market value, just for for the S & P 500 companies. The broader Wilshire 5000 stock index is down by a similar percentage these last two weeks with a total  total loss on that index of well over 3 trillion dollars since election day. While many Americans and the national media seem to be experiencing a kind of rapture about their new President elect, investors seem far more nervous.

The gains by the Democrats in Congress and the Senate, and the possibility of a filibuster proof majority in the Senate, the appointment of hard core anti- business Congressman Henry Waxman  to head the House Energy and Commerce Committee, the President's fixation on dealing  with global warming the overtures that are sure to come to assist  trial lawyers, and union organizing efforts (card check), the prospect of higher taxes on dividends, capital gains, earned income, estates, and corporations,  and the likelihood of much heavier regulation of business, are all things noticed on Wall Street.

Investors do not look at this picture and see an economic recovery, even with hundreds of billions that may be spent on new make work public sector ("green" ) jobs, and other new federal spending that is sure to come.  When Tom Daschle, just named as Secretary of Health and Human Services,  says America will soon look  like a European economy  is it any wonder why investors are selling the market?

One additional item to note: Most election analysts have argued that John McCain started to sink in the polls once the financial markets collapsed beginning in mid September. But what if  following an initial downdraft associated with the Lehman Brothers collapse, the real story is the market's reaction to Obama's rise in the polls,  rather than the other way around? . On September 12th, the last trading day before the Lehman Brothers story broke, the S & P closed at 1251, 25% higher than it closed on Election Day, and 66% higher than it closed yesterday.  Doug Ross suggests that it may be Obama's poll numbers that were the horse  pulling (backwards?) the cart that is the stock market.  Could that be true? Could Obama's climbing poll numbers in September and October been attributable, not just to the financial meltdown, but also to Obama's saturation advertising  campaign,  and superior ground game, which really came into play in the last two months of the campaign?

I think these structural campaign advantages helped  a lot.  If one accepts Ross's argument,  then the market has discounted an Obama victory and now an Obama Presidency  by $6 trillion in two months. Are happy days here again?

See also The Obama Market.