NEW YORK (Jan 21): The benchmark S&P 500 slipped on Tuesday as worries about the fallout from a deadly virus outbreak in China and a gloomy growth outlook from the IMF prompted investors to lock in recent gains.
The developments soured mood among U.S. investors who drove the main indexes to record highs last week, encouraged by strong data, the signing of the Phase 1 U.S.-China trade deal and an upbeat start to fourth-quarter earnings season.
Chinese officials on Tuesday confirmed the new coronavirus outbreak took six lives and that it could spread between humans, stoking fears of a global pandemic and reviving memories of Severe Acute Respiratory Syndrome (SARS) — another coronavirus outbreak that killed nearly 800 people in 2002-03.
With the virus spreading just ahead of the Chinese New Year holidays, the S&P 1500 airlines index fell 2.4%.
Hotel and casino operators Las Vegas Sands Corp and Wynn Resorts Ltd, both of which have large operations in China, dropped about 5%.
Booking.com owner Booking Holdings Inc and TripAdvisor Inc both fell about 2%.
"It remains to be seen if this will transpire into a bigger more systematic event that will start weighing on fundamentals," said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.
"Anytime you have a run in the equity markets, it's not surprising to see small unexpected rifts. It's giving investors a reason to take some profits."
At 11:23 a.m. ET, the Dow Jones Industrial Average fell 0.18% to 29,296.41 and the S&P 500 dropped 0.14% to 3,325.09.
The Nasdaq Composite was flat at 9,388.58, buoyed by Microsoft Corp and a 6.3% jump in Tesla Inc.
Netflix Inc and International Business Machines Corp are set to report earnings, after market closes.
Another cause for concern was the International Monetary Fund (IMF) trimming its global growth forecasts for 2020 and 2021. IMF Managing Director Kristalina Georgieva said on Monday that while a slowdown in global growth appeared to have bottomed out, there was no rebound in sight.
Halliburton Co rose 1.7% after the oilfield service reported better-than-expected quarterly adjusted earnings.
Morgan Stanley slid 3.6%, after Citigroup downgraded the Wall Street bank's shares to "neutral".
Declining issues outnumbered advancers for a 1.55-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq.
The S&P index recorded 80 new 52-week highs and no new low, while the Nasdaq recorded 110 new highs and 24 new lows.