Investors spooked by virus outbreak

Banks led a slide in U.S. stocks Tuesday as a virus outbreak in China rattled global markets, prompting investors to shift assets into bonds and defensive sector companies.

The sell-off snapped a three-day winning streak by the S&P 500. The benchmark index ended last week at an all-time high.

The selling in U.S. stocks followed losses in Asian and European markets as investors worried that the new coronavirus spreading in the world’s second-largest economy could hurt tourism and ultimately economic growth and corporate profits.

Six people have died, and 291 have been infected in China, just as people there were preparing to make billions of trips for the Lunar New Year travel season. And a U.S. citizen who recently returned from China was diagnosed with the new virus in the Seattle area, making the U.S. the fifth country to report a case, following China, Thailand, Japan and South Korea.

Within the S&P 500, stocks of U.S. companies that cater to Chinese tourists had some of the biggest losses, along with general travel companies, such as casinos and airlines. Along with banks, industrial and energy stocks accounted for a big share of the selling. Those losses outweighed gains in real estate stocks, utilities and household goods makers. Traders also shifted money into U.S. government bonds, sending yields lower.

“From an investment standpoint, the risk with any virus is in the scope of its economic impact, and the mere fact that this has spread from China overnight to the U.S. so quickly reinforces the idea that the negative fallout could be global rather than local,” said Alec Young, managing director of Global Markets Research for FTSE Russell.

The S&P 500 fell 8.83 points, or 0.3 percent, to 3,320.70. It had been down as much as 0.4 percent earlier in the day.

The Dow Jones Industrial Average lost 152.06 points, or 0.5 percent, to 29,196.04. The Nasdaq composite slid 18.14 points, or 0.2 percent, to 9,370.81.

Smaller-company stocks took the brunt of the selling. The Russell 2000 index lost 13.74 points, or 0.8 percent, to 1,685.90. The selling began early in the first trading day of a holiday-shortened week and followed sell-offs overnight in Asian markets and downbeat trading in Europe.