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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 1.57%, S&P 500 down 1.57%, Nasdaq down 1.89%
(Updates to market close)
By Chuck Mikolajczak
NEW YORK, Jan 27 (Reuters) - U.S. stocks suffered their
worst day in over three months on Monday as China extended the
Lunar New Year holiday due to a virus outbreak, fueling worries
about the economic impact of containment efforts in the world's
second largest economy.
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. Still, some investors viewed any long-term economic impact
as unlikely, given past experiences with viral outbreaks.
"This whole thing is way overblown," said Stephen Massocca,
senior vice president at Wedbush Securities in San Francisco.
"It seems to me the Chinese are doing a much better job of
containing it than with SARS and what did SARS ultimately lead
to? Did it lead to some sort of economic catastrophe - no."
After the 2003 SARS (Severe Acute Respiratory Syndrome)
outbreak, the S&P rallied more than 10% from the start of the
outbreak to the announcement of its containment.
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.
Adding to downside pressure was the sluggish start to
corporate earnings season with indexes near record levels.
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 453.93 points,
or 1.57%, to 28,535.8, the S&P 500 .SPX lost 51.84 points, or
1.57%, to 3,243.63 and the Nasdaq Composite .IXIC dropped
175.60 points, or 1.89%, to 9,139.31.
The Dow and S&P has their biggest one-day percentage drop
since Oct. 2 while the Nasdaq's fall was its largest since Aug.
23. Wall Street's fear gauge, the CBOE Volatility index .VIX ,
reached 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 1.6%.
Wynn Resorts Ltd WYNN.O , Melco Resorts & Entertainment Ltd
MLCO.O and Las Vegas Sands Corp LVS.N , which have large
operations in China, plunged at least 5%. The NYSE Arca Airline
index .XAL dropped 3.32%.
Yum China Holdings Inc YUMC.N tumbled 5.27% after the
company said it had temporarily closed some of its KFC and Pizza
Hut stores in Wuhan, the epicenter 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 1.42%. The S&P energy index .SPNY dropped 2.76% as crude prices
settled down about 2% on fears the outbreak would dent demand.
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 , reporting. Declining issues outnumbered advancing ones on the NYSE by a
3.63-to-1 ratio; on Nasdaq, a 3.25-to-1 ratio favored decliners.
The S&P 500 posted 20 new 52-week highs and 12 new lows; the
Nasdaq Composite recorded 42 new highs and 92 new lows.
About 8.11 billion shares changed hands in U.S. exchanges,
compared with the 7.31 billion daily average over the last 20
sessions.
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GRAPHIC-The S&P 500 rallied as SARS spread https://tmsnrt.rs/2RRYy3S
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