Wall Street was overwhelmingly in favor of Mitt Romney, the Republican challenger with close ties to the private equity and business communities. Plus, investor attention is quickly turning to what Tuesday's results mean for the looming fiscal cliff, the market's biggest headwind, according to market strategists and money managers.
If lawmakers fail to address the simultaneous onset of tax hikes and spending cuts that will be triggered on Jan. 1, they risk throwing the U.S. economy back into a recession and drive unemployment up even higher.
As investors weighed Obama's win and what it means for regulation, shares of financial companies and coal producers fell sharply.
Banking giants Bank of America(BAC) and Morgan Stanley(MS) shares declined about 3%, while shares of Goldman Sachs(GS), JPMorgan Chase(JPM) and Wells Fargo(WFC) also fell sharply.
Additionally, shares of Alpha Natural Resources(ANR) sank 9%, while Peabody Energy(BTU), James River Coal Co(JRCC), CONSOL Energy(CNX) and Walter Energy(WLT) were also down.
But hospital stocks including HCA(HCA) and Community Health Systems(CYH) rose, as Obama's win means the president's health care reform legislation is here to stay.
Obama's victory speech in 90 secs
In Europe, European Central Bank president Mario Draghi warned that the region's debt problems are starting to take its toll on the economy in Germany, which has so far been relatively insulated.
Following a morning rally, European stocks sold off in afternoon trading. Britain's FTSE 100 slipped 0.3% while the DAX in Germany and France's CAC 40 declined 0.7%.
Asian markets shaved morning losses after Obama's win was declared, as investors considered that Obama's is likely to ensure continuity in monetary policy in the near term. The Shanghai Composite and Japan's Nikkei finished little changed, while the Hang Seng in Hong Kong rose 0.7%.
World reacts to Obama's re-election
A victory by Romney, who had been highly critical of Fed chairman Ben Bernanke, would have resulted in more uncertainty about whether the Federal Reserve's loose monetary policies. The Fed's low interest rates and bond buying programs have largely been credited for boosting the market during the past three years.
The dollar initially eased against the major world currencies but reversed course. The dollar rose 0.6% against the euro and 0.2% versus the British pound. The dollar declined slightly against the Japanese yen.