Futures Fall Amid 'Fiscal Cliff' and Europe Woes

U.S. stock index futures were sharply lower Wednesday triggered by worries over the looming "fiscal cliff" and as fears over Europe resurfaced, trumping an initial relief from President Barack Obama's re-election.

"I don't think there's a long-term market reaction to the presidential election itself—it's now how quickly we can focus on the 'fiscal cliff' and coming up with a resolution," said Art Hogan, managing director of Lazard Capital Markets. (Read More: For Investors, More Fed Easing, Cliff 'Heart Attack' Await)

Meanwhile, ratings agency Fitch said Obama needs to move quickly to avoid the "fiscal cliff" that is threatening the country's economic recovery, adding that failure to address the issue would likely result in a downgrade in 2013.

However, the dollar fell against other major currencies, on worries over the "fiscal cliff" and continued monetary expansion. Gold, copper and other commodity prices rose on the weakness in the greenback.

Obama was re-elected president Tuesday night, put over the top by the crucial battleground state of Ohio following the most expensive election in U.S. history.

According to some market watchers, a victory for Obama may positive for stocks in the long run because it would mean continuity and the maintenance of quantitative easing policies by the U.S. Federal Reserve. Romney had been critical of the policies of the Fed and its Chairman Ben Bernanke.

Meanwhile, European shares reversed their gains following ECB President Mario Draghi's negative comments on the region's economy. Draghi said economic activity in the euro zone area is expected to remain weak and the slowdown may have reached Germany.

And the members of Greece's parliament are expected to vote on a new package of austerity measures with the government's majority under threat. If the bill doesn't pass, Greece will not receive its next financial aid installment of 31.5 billion euros ($40.2 billion) on Monday.

"The U.S. election temporarily flipped worries over Europe, but Europe still has an important role in global markets," said Quincy Korsby, market strategist at Prudential Financial. "They've obviously been a chronic condition, but it's flare ups like today that grabs attention."

On the economic front, weekly mortgage applications declined ast week as Hurricane Sandy battered the East Coast and disrupted normal business activity, according to the Mortgage Bankers Association.

Among earnings, Time Warner edged higher after the media company posted higher earnings.

And Kraft Foods rallied after the newly independent food manufacturer reported a higher profit.

Department-store chain Macy's is also slated to post results before the opening bell.

The Treasury is set to auction $24 billion in 10-year notes on Wednesday, with the results available shortly after 1pm ET.

The Federal Reserve will release its consumer credit report for September at 3 p.m. New York time. Economists polled by Thomson Reuters forecast a $10.1 billion gain, after a $18.1 billion increase in August.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

WEDNESDAY: Oil inventories, 10-yr note auction, consumer credit, Coach shareholders mtg, Oracle shareholders mtg; Earnings from Qualcomm, Activision Blizzard, CBS, Monster Beverage, Whole Foods
THURSDAY: International trade, jobless claims, 30-yr bond auction, Kellogg analyst day, 3M investor mtg, OPEC press conference; Earnings from Dean Foods, Wendy's, Disney, Groupon, Nordstrom, Nvidia, Kayak, Zipcar
FRIDAY: Import/export prices, consumer sentiment, wholesale trade; Earnings from JCPenney

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