Dow plunges nearly 650 points as risk-off sentiment prevails

Wall Street's major indexes fell sharply in choppy trading on Wednesday, snapping a three-day winning streak.

The Dow Jones Industrial Average tumbled 646.89 points, or 1.95 percent, to 32,513.94. The S&P 500 slid 79.54 points, or 2.08 percent, to 3,748.57. The Nasdaq Composite Index shed 263.03 points, or 2.48 percent, to 10,353.17.

The Dow and the S&P 500 posted their worst decline a day after any U.S. election in a decade, according to Dow Jones Market Data.

All the 11 primary S&P 500 sectors ended in red, with energy and consumer discretionary down 4.88 percent and 3.12 percent, respectively, leading the losses.

The above market reactions came as the final outcome of the U.S. midterm elections has yet to be fully revealed with control of the U.S. House and Senate still up in the air.

"Markets hate uncertainty," Morgan Stanley analysts said in a note, adding "investors should be prepared, as unexpected outcomes can create market volatility."

Investors are cautiously awaiting the October U.S. consumer price index, a popular measure of inflation, which is slated for release on Thursday.

Economists polled by Dow Jones expect the headline reading rose 0.6 percent from September, or 7.9 percent from a year ago.

Last week, the Federal Reserve raised benchmark interest rates by 75 basis points for the fourth consecutive meeting, and warned it still had "some ways to go" in its efforts to tame inflation.

Mark Haefele, chief investment officer at UBS Global Wealth Management, said that Fed policy will remain the main driver of markets.

"We do not yet see the conditions in place for a sustained equity rally, with the risk-reward outlook over the coming six months looking unfavorable," he cautioned.

U.S. equities have been battered this year as Wall Street grew fearful that aggressive central bank tightening would steer the economy into a recession.