The Dow closed down 121.41 points to 12,811.32, bringing its two-day loss to 434 points. The Standard & Poor's 500 index fell 1.22 percent to 1,377.51, and the Nasdaq composite slipped 1.42 percent to 2,895.58.
The Dow plunged 313 points Wednesday, its fifth worst one-day drop after a U.S. presidential election. The biggest, in 2008, came amid the financial crisis on the day after President Barack Obama won his first term.
The two-day slump came in the wake of Obama's re-election as investors turned their focus back to Europe's problems and the so-called fiscal cliff, a package of tax increases and government spending cuts that will occur unless Congress acts by Jan. 1. Investors see it as a serious threat to the economic recovery.
"The thinking before the election was that it would remove some of the uncertainty, but it seems to have done the opposite," said Tyler Vernon, chief investment officer at Biltmore Capital Advisors in Princeton, N.J.
Stocks are still up on the year, but well below the peak they reached in September.