US STOCKS- Wall Street sell-off deepens as virus spread sends investors fleeing

(Updates prices, adds commentary)
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* All S&P sectors in the red, energy falls most
* Indexes down: Dow 1.88%, S&P 1.81%, Nasdaq 1.62%

By Sinéad Carew
NEW YORK, Feb 25 (Reuters) - Wall Street's three major stock
indexes fell almost 2% on Tuesday as the coronavirus spread
further around the world and officials described it as "a
rapidly escalating epidemic," a day after the S&P 500 .SPX and
the Dow Industrials' .DJI biggest daily decline in two years.
U.S. stocks started the session with an attempt to rebound,
but were quickly rebuffed as investors, focused on the potential
economic impact of the outbreak, noted it had spread to new
countries including Spain and Romania. Also, the Associated Press reported https://apnews.com/58043910be7bdc6818344bdee2096bc2
that a senior member of the International Olympic Committee
said organizers are more likely to cancel the 2020 Olympics than
to postpone or move it if coronavirus makes it too dangerous to
hold in Tokyo.
The U.S. Centers for Disease Control and Prevention said
Americans should prepare for possible community spread of
coronavirus. Earlier in the day, Iran's death toll from the
virus rose to 16, the highest outside China, while dozens of
countries from South Korea to Italy accelerated emergency
measures. As a result, U.S. stock indexes were on track for their
biggest 4-day percentage drop since December 2018. Fears of a
pandemic had knocked off more than 3% on Monday and erasing the
S&P 500 and the Dow's gains for the year-to-date.
"For the first time in a while we're finally waking up to
the fact that this issue could go on for a while and have a
significant impact on Chinese and global economic growth and
potentially the United States," said Randy Frederick, vice
president of trading and derivatives for Charles Schwab in
Austin, Texas.
"When people react to it because they don't travel or go to
restaurants or go shopping, that'll have an immediate impact on
the economy. It depends how long it goes an how wide the
spread," he adding, advising that investors wait for at least
two days of gains before buying stocks again.
Travel stocks such as Tripadvisor TRIP.O , down 4.8%, and
Norweigian Cruise Line Holdings NCLH.K , down 5.2%,
underperformed as investors worried about the virus.
At 1:17 p.m. ET, the Dow Jones Industrial Average .DJI
fell 526.5 points, or 1.88%, to 27,434.3; the S&P 500 .SPX
lost 58.35 points, or 1.81%, to 3,167.54; and the Nasdaq
Composite .IXIC dropped 149.37 points, or 1.62%, to 9,071.91.
All of the S&P's 11 industry sectors were declining on
Tuesday though defensive industries such as consumer staples
.SPLRCS , down 0.95%, fell the least while energy .SPNY was
the biggest loser with a 3% dip.
Last week, positive fourth-quarter corporate earnings and
hopes of limited damage from the virus outbreak had pushed Wall
Street to record highs.
Some investors had been betting that central banks like the
U.S. Federal Reserve would counter any economic weakness
resulting from the virus with support such as interest rate
cuts. But worries about supply chain disruption curbed this
confidence.
"The markets are also coming around to this idea that when
it's a problem with the supply side, the central banks are not
equipped to deal with these kind of events," said Seema Shah,
chief investment strategist at Principal Global Investors in
London.
Department store operator Macy's Inc M.N fell 4% despite
reporting a smaller-than-expected drop in quarterly same-store
sales. Mastercard Inc MA.N shares fell 4.7% after announcing
Chief Executive Ajay Banga would step down at the start of the
next year and be replaced by products head Michael Miebach.
But shares of Dow-member Home Depot Inc HD.N provided a
boost, rising 1.2%, after the home improvement chain beat
quarterly sales and profit estimates. HP Inc HPQ.N surged 6%, providing the biggest boost to the
S&P, after saying it would step up efforts to slash costs and
buy back stock, as it sought investor support to defend against
a $35 billion takeover offer from U.S. printer maker Xerox
Holdings Corp XRX.N . Declining issues outnumbered advancing ones on the NYSE by a
5.10-to-1 ratio. On Nasdaq, a 4.93-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and 34 new lows;
the Nasdaq Composite recorded 24 new highs and 144 new lows.