NEW YORK -- It appears that Wall Street really did prefer the more business-friendly Mitt Romney to manage the economy from a desk in the White House.

An Obama stock market "bounce" never materialized after his re-election. Stocks, instead, fell with a thunderous thud Wednesday on news that the president, who gets low grades from investors on his business acumen, will be in charge of USA Inc. for another four years.

"There was a general view in the market that a Romney win would be more favorable to stocks," says John Praveen, chief investment strategist at Prudential International Investment Advisors. Many investors had apparently held out hope for a Mitt Romney victory.

With the ink barely dry on Obama's upbeat acceptance speech, the mind-set of Wall Street investors took a quick, downbeat, bearish turn. It was as if investors all hit a button at the same time that switched the market into worry-only mode, erasing any positive market-related vibes that might have existed a day earlier.

Fear that the nation's fiscal crisis would not be resolved in time to avoid falling off the edge of the so-called fiscal cliff intensified, as did fears that chronic uncertainty would infect the market through year's end.

Worries that Obama's plans to increase taxes on both capital gains and dividends would reduce investor appetite for stocks - and even spark selling before the tax bite kicks in -- also took hold.

Stocks that would be hurt by Obama's preference for stiff regulations, such as banks, sold off sharply. And to make matters worse Wednesday, worries about Europe's debt crisis returned to the top of investors' what-to-worry-about list.

Add it all up and what you get is a "Molotov cocktail that created a pretty severe bout of selling," says Andy Busch, a public policy strategist at BMO Capital Markets.

To say the negative mood hurt stocks would be an understatement, as Wall Street was awash in red ink all day. The damage inflicted was severe. About $400 billion in stock market value vanished in the trading session, according to Wilshire Associates.

The Dow Jones industrial average suffered its worst point drop since last November, plunging 313 points, or 2.4%, to 12,933. It was the fifth-worst drop following an Election Day since 1900, Bespoke Investment Group says. The biggest loss following a presidential election was four years ago when the Dow tumbled 5% after Obama won his first term in office.

Despite the down session, the Dow remains up nearly 6% for the year. The gains have been powered by an easy-money policy from the Federal Reserve, a housing comeback and resilient consumers who are keeping the economy growing.

There were no shortage of theories on Wall Street as to why the market reaction was so violently negative.

Garnering the most blame was the belief that the status quo election result -- with Obama holding on to his job and the Democrats retaining power in the Senate and the Republicans protecting their turf in the House of Representatives -- will translate into legislative gridlock that could jeopardize a deal getting done in Congress by year's end to avert the fiscal cliff.

"While both presidential candidates were silent about the fiscal cliff during the debates and the election season, it is now the No. 1 issue facing investors," says Barbara Novick, head of government relations for money management firm BlackRock.

The fiscal cliff is the term to describe the growth-killing impact of more than $600 billion in coming tax increases and government spending cuts on Jan. 1 unless Congress acts to avert it.

While gridlock is often considered bullish for stocks, because it makes it tough for one political party to push through its own agenda with little opposition, it is viewed as a negative now because many believe the economy will likely fall into recession early next year if the fiscal cliff is not resolved. And a recession spells trouble for corporate earnings, business confidence and stock prices.

Sure, the election ended one big uncertainty for the stock market. Investors now know that it will be operating under well-known Obama policies. The president wants to tax the wealthy to help pay down the deficit, impose more regulations on banks and other industries and continue to fund his health care law.

But the fiscal cliff is the latest uncertainty to undermine investor confidence.

"Markets are none the wiser about if, how and when Congress will deal with the colossal tightening in fiscal policy scheduled to occur early next year," Julian Jessop, an analyst at Capital Economics in London, told clients in a research note.

Other reasons cited for Wednesday's market swoon include fears that Obama's plan to increase taxes on stock capital gains and dividends will reduce demand for stocks, as investors' after-tax returns will shrink as a result. Many investors are probably already selling to avoid paying the higher tax rates, says Busch of BMO Capital Markets.

Lingering disappointment that Romney didn't pull off the upset also likely sparked some selling, adds Chris Verrone, an analyst at Strategas Research Partners. "The market was probably holding out some hope that Romney had a shot," he says.

News trickling out of Europe Wednesday that suggested the eurozone would be stuck in an even deeper economic slump this year than expected also hurt sentiment as it means slower growth ahead, adds Praveen.

So what will it take for Obama to get back in Wall Street's good graces? Here are five things Wall Street pros interviewed by USA TODAY said Obama can do to promote a better market environment and get stocks moving north again.

Wall Street's five-step to-do list for President Obama:

1. Get a fiscal cliff deal done. Failure to broker a deal means a recession is imminent. And that's bad news for U.S. investors, workers and employers. Letting the Bush tax cuts expire alone will take $127 billion out of the pockets of Americans. "Failure to avoid the fiscal cliff," says Praveen, "will damage the economy and investor confidence."

"No deal," Novick says, "means a tax hike for millions."

Optimists on Wall Street say there is enough at stake and enough incentive on the part of Obama and lawmakers to broker a deal, even if it comes at the 11th hour or simply limits the full impact.

"Shaving the fiscal cliff to a bump can make it easier to overcome," says Mark Luschini, chief investment strategist at Janney Montgomery Scott.

2. Extend an olive branch to Republicans. It will take negotiation on the part of Obama to cement a much-hoped-for "grand bargain" with Republicans needed to make the long-term fixes to tax policy, entitlements and deficit reduction that will put the U.S. economy on a sustainable path, adds Praveen.

While such a grand bargain is unlikely to come this year due to a lack of time, Wall Street would like to see the president moving in that direction, adds Novick.

3. Roll back onerous regulations. Stiff regulations imposed on banks, oil exploration companies and coal companies by Obama are crimping economic growth, corporate profitability and business opportunities in these industries, says George Schwartz, president of both Schwartz Investment Counsel and the Ave Marie Mutual Funds.

"He's got to roll back the regulations if he wants to create jobs, boost the economy and help generate wealth," he says.

4. Come up with credible plan to boost hiring. The economy is growing at a subpar 2% pace and the unemployment rate is still near 8%. That's not good enough, says Praveen. "Obama has to figure out creative ways to stimulate the economy," he says. Jobs programs would help. Easing regulations will also help. As will giving CEOs the confidence to invest. "He needs to be a little more pro-business," adds Praveen.

5. Rethink higher taxes on stock gains. If Obama allows the Bush tax cuts to expire and rates on capital gains rise from 15% to 20% and dividend income goes from 15% to the higher individual tax rates, it will reduce the attractiveness of stocks, says Busch. "By hiking rates on stock gains you are basically incentivizing investors to sell now to avoid paying the higher tax rate next year," he says.

There is one big thing that can go right for stocks. The biggest, of course, is if the fiscal cliff gets resolved, says Peter Hayes, head of BlackRock's municipal bond group.

"When the market sniffs out a possible compromise on the cliff and they see no big hit to the economy, you will see a gradual move back into risk assets like stocks," he says.

USA Today