By Tomi Kilgore, MarketWatch
Fears of a potential coronavirus pandemic has weighed heavily on shares of companies in a wide variety of sectors this week, particularly those with revenue exposure to travel into and out of China.
With the death toll reaching 6, and with more than 300 having been infected by the virus, the Chinese government confirmed over the long weekend that the virus can be spread by humans. That sparked fears of a pandemic similar to that of SARS (severe acute respiratory syndrome), another coronavirus that spread from China to more than a dozen countries in 2003 and killed about 800 people.
As airports in several countries increased biosecurity screenings of passengers from China, travel-related stocks were hit hard, especially considering how travel could be curtailed during the upcoming Lunar New Year travel season.
“Market participants fear possible contagion, as hundreds of millions of Chinese are expected to travel this Lunar New Year, which begins Friday, and as the virus has been detected in three countries outside of China,” wrote Charles Campbell, trading desk specialist at MKM Partners, in a note to clients.
The broader stock market’s losses accelerated slightly after the Centers for Disease Control and Prevention confirmed Tuesday that one individual in the U.S. was diagnosed with coronavirus, after arriving back in the U.S. following a visit to Wuhan, China.
Shares of Priceline.com parent Booking Holdings Inc. /zigman2/quotes/203576210/lastsale BKNG -10.73% sank 3.5% in afternoon trading, Expedia Group Inc. /zigman2/quotes/202291990/lastsale EXPE -6.80% gave up 1.9% and TripAdvisor Inc. /zigman2/quotes/206118480/lastsale TRIP -9.25% shed 1.6%.
The U.S.-listed shares of Shanghai-based Trip.com Group Ltd. /zigman2/quotes/210510831/lastsale TCOM -6.24% tumbled 9.3%. Trip.com’s stock were among the biggest decliners in the Invesco Golden Dragon China exchange-traded fund /zigman2/quotes/207362625/lastsale PGJ -4.39% , which tracks China-based companies that derive most of their revenue from China, and dropped 2.9%.
The declines came in the context of a 0.3% decline in the S&P 500 index /zigman2/quotes/210599714/realtime SPX -3.37% .
Airline stocks were also affected, as United Airlines Holdings Inc. /zigman2/quotes/205037281/lastsale UAL -7.62% slumped 5.4%, Delta Air Lines Inc. /zigman2/quotes/200327741/lastsale DAL -6.78% slid 4.1% and American Airlines Group Inc. /zigman2/quotes/209207041/lastsale AAL -10.34% dropped 4.4%.
Those stocks were among the bigger decliners within the Dow Jones Transportation Average /zigman2/quotes/210598063/realtime DJT -4.30% , which tumbled 1.9% while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -4.06% slipped 179 points, or 0.6%.
If travel is restricted as a result of the coronavirus, sellers of luxury goods could feel the heat, as the companies rely on spending by Chinese tourists. Shares of Estee Lauder Companies Inc. /zigman2/quotes/200740220/lastsale EL -7.11% slumped 1.1%, Tiffany & Co. Inc. /zigman2/quotes/209249105/lastsale TIF -1.30% eased 0.2%, Coty Inc. /zigman2/quotes/208645074/lastsale COTY -5.54% shed 2.0% and LVMH Moet Hennessy Louis Vuitton S.E. /zigman2/quotes/202542535/delayed LVMHF -0.0051% declined 2.3%.
“The key risk to the sector is constraints on travel and movement from/to and within the Asian region and, in particular, with regard to the Chinese consumer,” J.P. Morgan analyst Melanie Anne Flouguet wrote in a research note.
Among cruise operators, shares of Royal Caribbean Cruises Ltd. /zigman2/quotes/208854639/lastsale RCL -15.05% were hit the hardest, down 4.7%, while Carnival Corp. /zigman2/quotes/202325446/lastsale CCL -19.14% lost 2.6% and Norwegian Cruise Line Holdings Ltd. /zigman2/quotes/204183397/lastsale NCLH -23.49% declined 3.2%.