The Dow Jones Industrial Average tumbled 312.95 points (2.36 percent) to finish at 12,932.73, closing below 13,000 for the first time since August.

The tech-rich Nasdaq Composite shed 74.64 (2.48 percent) at 2,937.28.

The S&P 500-stock index, a broad measure of the markets, skidded 33.86 (2.37 percent) to 1,394.53.

"Despite the reelection of President Obama clearing up some of the political uncertainty in the US, stocks are selling off," said Charles Schwab & Co. analysts.

The rout came "as attention turns to the looming automatic spending cuts and tax hikes known as the fiscal cliff, complicated by Congress remaining divided," they said.

Obama won a resounding victory over Republican challenger Mitt Romney for another four-year term in a closely fought race late Tuesday.

But voters left Congress divided, with Democrats maintaining control of the Senate and Republicans holding the House of Representatives.

After opening sharply lower, losses on the stock indices accelerated in a tsunami of red ink.

"By returning a divided government to Washington, the electorate has given neither party a clear mandate to address the lackluster recovery, the fiscal cliff, and the looming debt crisis," said Brian Kessler at Moody's Analytics.