Silvia Izquierdo, Associated Press
Newspapers headline the re-election of Brazil's President Dilma Rousseff in Rio de Janeiro, Brazil, Monday, Oct. 27, 2014. Rousseff was re-elected Sunday in the tightest race Brazil has seen since its return to democracy three decades ago, giving the Workers' Party its fourth-straight presidential victory.

RIO DE JANEIRO — Brazil's stock exchange slipped and its currency fell against the dollar Monday as the market reacted negatively to the volatile presidential race that saw President Dilma Rousseff narrowly win re-election over her pro-business rival, Aecio Neves.

Early afternoon trading was volatile, with the Brazilian real falling 3 percent to 2.53 against the U.S. dollar and the Sao Paulo-based Bovespa stock exchange down 4 percent to 49,875, led lower by 12.9 percent drop in state-run oil company Petrobras.

Rousseff scraped to a narrow victory in Sunday's race, taking 51.6 percent of the vote, compared with Neves' 48.4 percent after a bruising campaign that polarized Brazil along class lines.

While the poor largely came out in support of Rousseff, whose Workers' Party has presided over wealth distribution programs that have helped improve the fortunes of the poorest, the upper middle class and wealthy supported the center-right Neves.

For weeks, markets have risen when Rousseff fell in voter polls, and dropped when surveys showed her leading.

Analysts predicted the market would react negatively to a victory by Rousseff, under whom the once-booming economy of this emerging giant has stalled. After four straight years of weak growth, Brazil's economy is now in technical recession and 12-month inflation hovers above the government's ceiling target of 6.5 percent.

Many analysts say sweeping reforms are in order but they doubt Rousseff's willingness or ability to spend the political capital needed to push any such measures through a fragmented congress where she now has less support.

Neil Shearing, Chief Emerging Markets Economist for the London-based Capital Economics Ltd., said he remained skeptical about Brazil's outlook.

"Really, the critical thing in all of this is what happens next on the political front," he said, adding he was heartened that Rousseff addressed the need for political and economic reform in her victory speech. "If she's successful in pursuing that reform, frankly the weakness in the currency and the weakness of the stock market could be short-lived."

But, Shearing added that "we're not holding our breath" that the reforms will come about, as those needed "to revive the economy all necessarily mean shifting incomes away from consumers and toward business, and that really undermines her base."

Even before winning re-election Rousseff fired her much-criticized Finance Minister Guido Mantega.

Shearing said whom Rousseff chooses to replace Mantega would be a clue as to her economic approach in the second term.

"Who replaces him, whether it's a more pro-business candidate, whether it's someone from the Workers' Party ranks — which will represent more business as usual — that will be the first thing to look out for," he said.