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Wall Street falls as China virus reaches the U.S.

NEW YORK (Reuters) - Wall Street lost ground on Tuesday, backing away from record highs as a viral outbreak from China found its way to U.S. shores and the International Monetary Fund (IMF) lowered its global economic growth forecast.

All three major U.S. stock averages fell following several days of record closing highs and their best one-week advance in months.

The indexes extended their losses after the Centers for Disease Control and Prevention confirmed the first U.S. case of the coronavirus, which has now killed six people in China.

“We’re seeing headline risk introduced to the market and any time there’s new uncertainties, we see more volatility and flight to quality and investors fleeing risk assets,” said Charlie Ripley, senior market strategist for Allianz Investment Management in Minneapolis.

“Today’s news around the coronavirus is a reminder that risks remain, and it’s something that investors will be paying attention to in the coming weeks and months,” Ripley added.

With the outbreak occurring just before the Chinese lunar new year, the news hit travel-related stocks the hardest.

The NYSE Arca Airline index .XAL dropped 2.8%.

United Airlines UAL.O fell by 4.4%, while Carnival Corp CCL.N dipped 2.3%.

Hotel and casino operators Las Vegas Sands Corp LVS.N and Wynn Resorts Ltd WYNN.O, both of which have sizable operations in China, ended the session down 5.4% and 6.1%, respectively.

Steel stocks, which have a sizable exposure to China, also fell. United States Steel Corp X.N was down 5.2%.

Boeing Co BA.N weighed heaviest on the blue-chip Dow, its shares falling 3.3% following reports the planemaker's 737 MAX might not win approval to return to service until June or July.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 21, 2020. REUTERS/Brendan McDermid

In other news, the IMF trimmed its global economic growth forecasts for 2020 and 2021, with Managing Director Kristalina Georgiev citing lasting effects from the bruising U.S.-China trade war and sharper-than-expected slowdowns in India and other emerging markets.

The Dow Jones Industrial Average .DJI fell 152.06 points, or 0.52%, to 29,196.04, the S&P 500 .SPX lost 8.82 points, or 0.26%, to 3,320.8 and the Nasdaq Composite .IXIC dropped 18.14 points, or 0.19%, to 9,370.81.

Of the 11 major sectors in the S&P 500 seven ended the session in the red, with energy .SPNY, industrials .SPLRCI, and materials .SPLRCM suffering the largest percentage drops.

Real estate .SPLRCR led the gainers.

Fourth-quarter earnings season continues apace, with 46 of the companies in the S&P 500 having reported. Of those, 71.7% have beaten analyst expectations.

Members-only chain store Costco Wholesale Corp COST.O advanced 2.8% after Oppenheimer upgraded the shares to "outperform."

Intel Corp INTC.O gained 1.6% after three brokers raised their price targets for the chipmaker's shares.

Electric automaker Tesla Inc TSLA.O rose 7.2% after new Street Research hiked its price target to $800 per share.

Netflix Inc NFLX.O shares fell more than 1% in after-hours trading after posting fourth-quarter results.

International Business Machines Corp IBM.N rose more than 4% after the bell after reporting a surprise revenue increase on cloud growth.

Declining issues outnumbered advancing ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favored decliners.

The S&P 500 posted 89 new 52-week highs and two new lows; the Nasdaq Composite recorded 140 new highs and 37 new lows.

Volume on U.S. exchanges was 8.13 billion shares, compared with the 7.02 billion-share average over the last 20 trading days.

Reporting by Stephen Culp; Editing by Tom Brown and Jonathan Oatis

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