By Anna Hirtenstein and Karen Langley
Stocks and crude oil tumbled Monday as escalating concerns about the containment of China's viral outbreak reignited global growth worries.
The Dow Jones Industrial Average fell 455 points, or 1.6%, and the S&P 500 dropped by the same percentage. The technology-heavy Nasdaq Composite lost 1.9%. All three indexes recorded their worst day since at least October.
Uncertainty surrounding the virus jolted a market that had been unusually calm: The S&P 500 hasn't closed up or down 1% in a single trading session since mid-October, one of its longest such streaks since 1969.
"It reminds investors that this market can turn on a dime should it start to question what was causing it to go higher," said Sam Stovall, chief investment strategist at CFRA, of the volatility.
The coronavirus has infected more than 2,700 people and killed at least 80, mostly in China's Hubei province, with public-health officials warning that it is growing more contagious. The number of U.S. cases has risen to five and the government is working to evacuate American citizens from the epicenter.
"It's unclear how far it could have potentially spread," said Georgina Taylor, a multiasset fund manager at Invesco. "If it turns into a global health issue, that's really the next piece of information that would worry us."
As investors bid down stocks, they bought haven assets such as government bonds and gold. The benchmark 10-year Treasury yield fell to 1.610%, its lowest closing level since October. Yields move inversely to prices.
The Cboe Volatility Index, or VIX, which measures expected moves in the S&P 500 index, climbed to its highest level since the start of this year.
U.S. stocks have steadily risen since mid-October when the Trump administration indicated it was nearing a phase-one trade deal with Beijing. Meanwhile, improving economic data eased fears about a manufacturing slowdown bleeding into the broader economy.
Stocks have been trading at relatively high multiples of earnings, which has made them more vulnerable to pullbacks in response to negative headlines, said Yousef Abbasi, global market strategist at INTL FCStone.
"Investors were considering and really looking forward to improved global growth," he said. "Uncertainty like this causes people to step back and reassess the amount of risk they're taking."
While shares of companies in travel-related industries were among the hardest-hit, investors also sold stocks with less apparent exposure to the efforts to contain the virus.
"Clearly, the news today is just hit the sell button first and worry about the details later," said Jack Ablin, chief investment officer at Cresset Capital.
Kristina Hooper, chief global market strategist at Invesco, said investors should keep market fundamentals in mind and avoid panicking.
"Investors would be well-served to stay the course and remain well-diversified," she said.
In addition to developments around the virus, investors will be watching a big week of earnings reports from U.S. companies. With about 17% of S&P 500 companies having reported for the fourth quarter, 70% have topped analysts' earnings expectations, according to FactSet. Still, analysts are expecting earnings for the S&P 500 as a whole to drop 1.9% from a year earlier, before climbing again in the first quarter of 2020.
Shares of D.R. Horton climbed 2% after the home builder beat expectations for quarterly revenue.
Investors also will be keeping an eye on the Federal Reserve's meeting Wednesday, though the central bank is expected to hold its benchmark rate steady.
Overseas, Stoxx Europe 600 retreated 2.3%. Markets in China, Hong Kong and South Korea were closed Monday for the public holiday. Japan's Nikkei 225 index closed down 2%.
Hotel, cruise and airline stocks fell on concerns that the coronavirus could affect global travel. The Chinese government has imposed restrictions on movement in Hubei province, and the U.S. Centers for Disease Control and Prevention issued a warning to avoid nonessential travel to this part of China.
Wynn Resorts lost 8.1%, due to its large presence in gambling hot spot Macau. Las Vegas Sands was down 6.7%. Royal Caribbean Cruises fell 7.5%.
Airlines were also big losers. United Airlines Holdings dropped 5.2%, and American Airlines fell 5.5%. Delta Air Lines lost 3.4%.
Miners slumped as investors feared that the virus outbreak could erode China's demand for industrial commodities. Freeport-McMoRan fell 8.1%.
Oil prices slumped by the most in more than four months as the virus outbreak threatens to damp economic growth in China, the world's biggest energy consumer. Brent crude, the global benchmark, declined 2.3% to $59.32 a barrel.
Write to Anna Hirtenstein at firstname.lastname@example.org and Karen Langley at email@example.com
(END) Dow Jones Newswires
January 27, 2020 16:20 ET (21:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.