Coronavirus sparks deepest S&P 500 drop since early 2018

By Noel Randewich

SAN FRANCISCO (Reuters) – The S&P 500 suffered its worst day in two years on Monday as a surge in coronavirus cases outside China rattled investors already worried about valuations following recent record highs.

The S&P 500’s 3.35% slump was the leading U.S. stock index’s deepest one-day loss since February 2018, when Wall Street was in a correction.

The fear in Monday’s session came after investors in recent months often downplayed the overall risk related to the new coronavirus. Monday’s drop wiped out all of the S&P 500’s gains for 2020.

“With stock prices and valuations still near cycle highs, the risk of a worsening virus outbreak has not been priced into the market to a great extent,” Truist/SunTrust Advisory Chief Market Strategist Keith Lerner wrote in a client note.

S&P 500 sector indexes are mostly still close to their record highs, with the exception of energy (). The S&P information technology index () tumbled 4.2% on Monday, slammed by losses for chipmakers and Apple (O:), which rely more than most other U.S. companies on China. The information technology index is down over 7% from its record high on Feb 19, but remains up almost 4% in 2020.

(GRAPHIC: Sectors vs 52-week highs – https://fingfx.thomsonreuters.com/gfx/mkt/13/2450/2418/Sectors.jpg)

The Philadelphia Semiconductor Index () has fallen 9% from its record high last week.

(GRAPHIC: Philadelphia Semiconductor Index – https://fingfx.thomsonreuters.com/gfx/mkt/13/2448/2416/chip%20index.jpg)

Increased fears that the coronavirus could become a pandemic led to a spike in the number of listings on the New York Stock Exchange hitting 52-week lows. At 503, Monday saw the greatest number of new lows in a session since last August. At the same time, the number of stocks hitting 52-week highs shrank to 278 from over 400 on Friday.

(GRAPHIC: New highs and lows – https://fingfx.thomsonreuters.com/gfx/mkt/13/2449/2417/New%20Lows.jpg)

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