(For a live blog on the U.S. stock market, click LIVE/ or type LIVE/ in a news window.)
* Airlines, casino stocks down on concerns of travel demand
* Banks follow U.S. Treasury yields lower
* Crude slips below $60, energy shares down
* Indexes down: Dow 1.26%, S&P 1.28%, Nasdaq 1.58% (Updates to early afternoon)
By Sruthi Shankar
Jan 27 (Reuters) - Wall Street’s main indexes fell more than 1% on Monday as investors worried about the economic fallout of a virus outbreak in China that has prompted the country to extend the Lunar New Year holidays and businesses to close some operations.
The benchmark S&P 500 was jolted off record highs 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.
Travel-related stocks, including airlines, casinos and hotels, were the worst-hit on Wall Street, while shares of sectors exposed to China’s growth, including technology, materials and energy, pressured the markets.
“We’d a strong market heading into the year and there was a little bit of over-confidence,” said Jason Pride, chief investment officer of private wealth at Glenmede in Philadelphia.
“5-10% corrections are typical for any given year in equity markets. Maybe this time around, there is a larger economic risk posed by this outbreak because the epicentre of the outbreak (China) is exactly the reason for concern from last year.”
At 1:13 p.m. ET, the Dow Jones Industrial Average fell 1.26% to 28,624.77.
The S&P 500 dropped 1.28% to 3,253.17 and the Nasdaq Composite declined 1.58% to 9,167.40. The indexes were on track to post their biggest single-day percentage loss since October.
Wall Street’s fear gauge, the CBOE Volatility index, jumped to its highest since Oct. 10.
Technology and internet heavyweights that have powered the recent rally including Apple Inc, Microsoft Corp , Alphabet Inc and Amazon.com Inc dropped between 1.6% and 3%.
Wynn Resorts Ltd, Melco Resorts & Entertainment Ltd and Las Vegas Sands Corp, which have large operations in China, slid between 3.7% and 7%. The NYSE Arca Airline index dropped 3.8%.
Yum China Holdings Inc slid 4.3% after the company said it had temporarily closed some of its KFC and Pizza Hut stores in Wuhan, the epicentre of the outbreak.
The death toll in China rose to 81 on Monday and a small number of cases linked to people who travelled from Wuhan have been confirmed in more than 10 countries, including Thailand, France, Japan and the United States.
The rush to safe haven assets sank U.S. Treasury yields to three-month lows, putting pressure on lenders. The S&P 500 banks index was down 1.0%.
The S&P energy index dropped 2.4% as crude prices fell below $60 per barrel on fears of slowing oil demand following the outbreak.
Defensive sectors such as consumer staples, real estate, healthcare and utilities posted minimal losses.
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, expected to report.
No.1 U.S. homebuilder D.R. Horton Inc rose 2.2% after raising the upper end of its forecast for full-year home sales.
Declining issues outnumbered advancers for a 3.85-to-1 ratio on the NYSE and a 2.69-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and 12 new lows, while the Nasdaq recorded 30 new highs and 84 new lows. (Reporting by Sruthi Shankar in Bengaluru Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)