NEW YORK — A case of post-election nerves sent Wall Street plunging Wednesday as investors, looking past Barack Obama's presidential victory, returned to their fears of a deep and protracted recession. Volatility swept over the market again, with the Dow Jones industrials falling nearly 500 points and all the major indexes tumbling more than 5 percent.

The market was widely expected to give back some gains after a run-up that lifted the Standard & Poor's 500 index more than 18 percent and that gave the Dow its best weekly advance in 34 years. Moreover, many analysts had warned that Wall Street faced more turbulence after two months of devastating losses.

But investors lost their recent confidence about the economy and began dumping stocks again.

"The market has really gotten ahead of itself, and falsely priced in that this recession wasn't going to be as prolonged as thought," said Ryan Larson, head of equity trading at Voyageur Asset Management. "Regardless of who won the White House, these problems are not going away."

"We're in a really bad recession, period," he said. "People are locking in profits and realizing we're not out of the woods."

Beyond broad economic concerns, worries about the financial sector intensified after Goldman Sachs began to notify about 3,200 employees globally that they have lost their jobs as part of a broader plan to slash 10 percent of the investment bank's work force, a person familiar with the situation said.

Commodities stocks also fell after steelmaker ArcelorMittal said it would slash production because of weakening demand.

Although the market expected Obama to win the election, as the session wore on, investors were clearly worrying about the weakness of the economy and pondered what his administration might do. Analysts said the market is already anxious about who Obama selects as the next treasury secretary, as well as whom he picks for other cabinet positions.

"The celebration is over. Today we saw a bit of reality," said Al Goldman, chief market strategist at Wachovia Securities. "President-elect Obama is coming into a situation with limited experience, having to handle an economy in serious trouble, a couple of wars and terrorism. It's an extremely tough job."

Analysts said investors were also uneasy in advance of the Labor Department's October employment report, to be issued Friday. Economists, on average, expect a 200,000 drop in payrolls, according to Thomson/IFR.

Late-day selling by hedge funds helped deepen the market's losses during the last hour. More selling by the funds is expected to weigh on the market ahead of a Nov. 15 cutoff for shareholders to notify fund managers of their intent to cash out investments before year-end.

The Dow fell 486.01, or 5.05 percent, to 9,139.27. The S&P 500 index fell 52.98, or 5.27 percent, to 952.77. The Nasdaq composite index fell 98.48, or 5.53 percent, to 1,681.64, while the Russell 2000 index of smaller companies fell 31.33, or 5.74 percent, to 514.64.

Wednesday's trading showed that the market is living up to expectations of continued volatility as it tries to recover from the devastating losses of the last two months.

Bill Stone, chief investment strategist at PNC Wealth Management, said the uncertainty over the direction the government's financial bailout plan will take under the next administration likely weighed on financial stocks Wednesday.

Analysts agree that Obama's most immediate priority will be dealing with the nation's financial crisis and deciding how to further implement the $700 billion rescue package passed by Congress last month.

Goldman said trading could remain turbulent as investors begin assessing the shape and direction of Obama's forthcoming economic policies.

"The market has to go through a period of figuring out if they are going to gain confidence in Obama and the Congress or lose it," he said.

Obama's victory means that industries such as oil and gas producers, utilities and pharmaceuticals may face greater regulation and even taxes, while labor unions and automakers are expected to benefit.

In addition, banks, insurance companies, hedge funds and the rest of the financial sector will almost certainly face attempts at a regulatory overhaul by the Democratic Congress next year.