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* Airlines, casino stocks down on concerns of travel demand
* Banks follow U.S. Treasury yields lower
* Crude slips below $60, energy shares down
* Dow down 1.24%, S&P 500 down 1.25%, Nasdaq down 1.49%
(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Jan 27 (Reuters) - U.S. stocks fell more than 1%
on Monday as investors worried about the economic impact of a
virus outbreak in China as containment efforts including travel
bans have been put in place in the world's second largest
economy after the country extended the Lunar New Year holiday.
The benchmark S&P 500 suffered its worst weekly performance
since September last week as China locked down several cities
and curbed travel, reminding investors of the deadly SARS virus
that killed nearly 800 people in 2002-03 and cost the global
economy billions. With cases being linked in as many as a dozen other
countries, U.S. President Donald Trump offered China whatever
help it needed to contain the virus. Travel-related stocks, including airlines, casinos and
hotels, were among the hardest hit on Wall Street, while shares
of sectors exposed to China's growth, including technology
.SPLRCT , materials .SPLRCM and energy .SPNY , pressured the
markets.
"Obviously there has to be some concern about its impact on
global GDP growth otherwise the market wouldn't be down," said
Sam Stovall, chief investment strategist at CFRA Research in New
York.
Adding to downside pressure was the sluggish start to
corporate earnings season with indexes near record levels.
"Most people were buying into the market in anticipation of
improving economic and earnings expectations, which just didn't
materialize," Stovall said.
Earnings are now expected to show a decline of 0.5% for the
fourth quarter, according to Refinitiv data. Of the 87 companies
that have reported though Monday morning, 67.8 have topped
expectations, below the 74% rate from the past four quarters.
The Dow Jones Industrial Average .DJI fell 358.92 points,
or 1.24%, to 28,630.81, the S&P 500 .SPX lost 41.05 points, or
1.25%, to 3,254.42 and the Nasdaq Composite .IXIC dropped
139.20 points, or 1.49%, to 9,175.71.
All of the three major averages were on track for their
biggest one-day percentage declines since early October. Wall
Street's fear gauge, the CBOE Volatility index .VIX , touched a
high of 19.02, its highest since Oct. 10.
Technology and internet heavyweights that have powered the
recent rally including Apple Inc AAPL.O , Microsoft Corp
MSFT.O , Alphabet Inc GOOGL.O and Amazon.com Inc AMZN.O ,
which account for about 15% of the S&P 500 weighting, lost at
least 1.3%.
Wynn Resorts Ltd WYNN.O , Melco Resorts & Entertainment Ltd
MLCO.O and Las Vegas Sands Corp LVS.N , which have large
operations in China, slid at least 5%. The NYSE Arca Airline
index .XAL dropped 3.25%.
Yum China Holdings Inc YUMC.N tumbled 4.95% after the
company said it had temporarily closed some of its KFC and Pizza
Hut stores in Wuhan, the epicentre of the outbreak. The rush to safe haven assets sank U.S. Treasury yields,
with the benchmark 10-year note US10YT=RR falling as low as
1.603%, its lowest since Oct. 10, and the yield curve between
the two-year US2YT=RR and 5-year US5YT=RR inverting for the
first time since Dec. 4, putting pressure on lenders. The S&P
500 banks index .SPXBK was down 1.21%. The S&P energy index .SPNY dropped 1.21% as crude prices
fell below $60 per barrel on fears of slowing oil demand
following the outbreak. Fourth-quarter earnings will kick into high gear this week
with 141 of the S&P 500 companies, including Apple, Microsoft
Corp and Boeing Co BA.N , expected to report. Declining issues outnumbered advancing ones on the NYSE by a
3.29-to-1 ratio; on Nasdaq, a 2.30-to-1 ratio favored decliners.
The S&P 500 posted 19 new 52-week highs and 12 new lows; the
Nasdaq Composite recorded 37 new highs and 86 new lows.