NEW YORK (MarketWatch) -- U.S. stocks hastened their sharp declines, erasing the largest Election Day gains in more than two decades, as investors pondered the task ahead for President-elect Barack Obama in confronting the poor shape of the economy.

"Obama's honeymoon with the markets was a short one as stocks unwound their Election-Day relief rally... as the credit and financial mountain remains a tall one to climb," said analysts at Action Economics.

The potential for a deep U.S. recession and the worst global financial crisis since the Great Depression gives Obama little time to bask in the afterglow of his victory, economists said. Read more.

"Yesterday's market action was in anticipation of an Obama victory -- it looks like more of a landslide -- now we're down to business and the market is going to wait until he talks about an economic plan," said Peter Cardillo, chief market economist at Avalon Partners.

Stocks quickened the pace of their losses in afternoon trade, with financial shares hammered the hardest.

The Dow Jones Industrial Average DJIA, -0.47% fell more than 500 points. The blue-chip index ended at 9,139.27, off 486.01 points, or 5.1%.

The blue-chip index had gained 3.3% the prior session, topping the 1.2% advance tallied in 1984 when Ronald Reagan won a second term.

On Wednesday, all of the Dow's 30 components posted late-session declines, with the losses led by Citigroup Inc. C, -2.12% , off 14%, and Bank of America Corp. BAC, -1.32% , down 11.3%.

General Motors Corp. GM, -2.37% erased earlier gains, off 2.8%. The Detroit News cited an internal GM memo in reporting that the automaker would announce "important changes" to its operation when it releases third-quarter results on Friday.

The S&P 500 Index SPX, -0.48% declined 52.98 points, or 5.2%, to 958.00, and the Nasdaq Composite Index COMP, -0.29% shed 98.48 points, or 5.5%, to 1,681.64.

Financials, materials and consumer discretionary shares fronted the losses in the S&P's 10 industry groups.

Volume proved exceedingly light, with 1.3 billion shares traded on the New York Stock Exchange, where four stocks were on the decline for every one on the rise. On the Nasdaq, 902 million shares traded, and decliners surpassed advancing stocks, also by a roughly 10-to-3 margin.

Jobs lost

In economic data, the ADP index of private employment showed companies shed 157,000 jobs in October, with the report seen as a preview of sorts of Friday's non-farm payrolls for the month. Read Economic Report.

The Institute for Supply Management reported non-manufacturing sectors of the U.S. economy contracted sharply in October, with its index falling to 44.4% from 50.2% in September.

The U.S. dollar posted mild gains, with the dollar index DXY, +0.11% , a measure of the greenback against a trade-weighted basket of six currencies, climbing to 84.79 from 84.533 in North American trade late Tuesday. Read Currencies.

Crude fell, with oil futures for December delivery off $5.23 to finish at $65.3 a barrel on the New York Mercantile Exchange. See Futures Movers.

Gold futures fell, snapping a two-day winning streak, down $14.9 to close at $742.40 an ounce. Read Metals Stocks.

Treasury prices gained, with 10-year note yields TMUBMUSD10Y, 0.650% lately down 6 basis points to 3.671%. See Bond Report.

Wednesday's earnings had Time Warner Inc. TWX, reporting a third-quarter profit slide of 1.7%, with the New York media giant cutting its estimate of full-year earnings from continuing operations. The company's shares fell 5.4%. Read more.

In developments in the technology sector, Google Inc. GOOG, +0.32% said it would no longer pursue a proposed advertising deal with Yahoo Inc. YHOO, citing resistance from regulators and some advertisers. Yahoo confirmed the deal's demise.

Overseas, shares in London snapped a six-session winning streak. See European Markets.

In Asia, most markets ended higher. Read Asian Markets.