Dow Drops 2% amid Profit-Taking, Senate Runoff Uncertainty

U.S. stocks were sharply lower at midday Monday, with analysts pointing to profit-taking and uncertainty about Georgia Senate runoffs that could flip the chamber to Democratic control.

Near 1725 GMT, the Dow Jones Industrial Average was down 2.1 percent at 29,959.77.

The broad-based S&P 500 also shed 2.1 percent to 3,675.64, while the tech-rich Nasdaq Composite Index lost 2.2 percent to hit 12,604.14.

Polls show both Senate races remain very close, leaving the possibility Republicans could maintain control of the chamber, or that it could go into Democratic hands, which would give incoming President-elect Joe Biden's party control of Congress.

"Traders seemed to be pretty happy with the way elections went initially because of the likelihood of divided government and nothing really radical getting through," said Chris Low, chief economist at FHN Financial.

"Traders start to get nervous when either party has a clear shot at getting things done," said Low, who cited tax policy as one area of special concern for investors.

Low also cited investor unease at the worsening public health situation in the United States, with elevated coronavirus cases coming at a time when many hospitals are at or near capacity.

Other analysts have also pointed to profit-taking after a late 2020 surge lifted major indices to repeat records in December.

This week's economic calendar includes data on the manufacturing and services sector, as well as the all-important official jobs report for December.