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Coronavirus sparks deepest S&P 500 drop since early 2018

By Noel Randewich
·2 min read
The New York Stock Exchange building is seen from Broad Street in Lower Manhattan in New York

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.

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S&P 500 sector indexes are mostly still close to their record highs, with the exception of energy <.SPNY>. The S&P information technology index <.SPLRCT> tumbled 4.2% on Monday, slammed by losses for chipmakers and Apple <AAPL.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 <.SOX> 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)

(Reporting by Noel Randewich; Editing by Bill Berkrot)