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* Travel stocks hit by extended Lunar New Year holidays
* Banks follow U.S. Treasury yields lower
* Crude slips below $60, energy shares down
* Indexes down: Dow 1.39%, S&P 1.42%, Nasdaq 1.80% (Updates to open)
By Sruthi Shankar
Jan 27 (Reuters) - U.S. stocks fell more than 1% on Monday as investors worried about the economic fallout of the fast-spreading coronavirus outbreak in China that has prompted the country to extend the Lunar New Year holidays and businesses to close some operations.
The benchmark S&P 500 was jolted off record highs last week as China locked down several cities and curbed travel, reminding investors of the deadly SARS virus that killed nearly 800 people in 2002-03 and cost the global economy billions.
Travel-related stocks, including airlines, casinos and hotels, were the worst-hit on Wall Street, while shares of tech heavyweights that enjoyed a strong rally recently dragged markets lower.
Apple Inc, Microsoft Corp, Alphabet Inc and Amazon.com Inc dropped between 1.5% and 2.6%.
Wynn Resorts Ltd, Melco Resorts & Entertainment Ltd and Las Vegas Sands Corp, which have large operations in China, slid between 4% and 7%. United Airlines Holdings Inc and American Airlines Group Inc fell 4.5% and 6.6%, respectively.
The iShares China Large-Cap ETF shed 4.1%.
Yum China Holdings Inc dropped 5.0% after the company said it had temporarily closed some of its KFC and Pizza Hut stores in Wuhan.
The death toll from the outbreak in China rose to 81 on Monday and a small number of cases linked to people who travelled from Wuhan have been confirmed in more than 10 countries, including Thailand, France, Japan and the United States.
Wall Street’s fear gauge, the CBOE Volatility index jumped to its highest since Oct. 10.
“The coronavirus will not validate or invalidate the present market multiple, it will just elevate volatility due to the embedded uncertainty of things,” David Bahnsen, chief investment officer of The Bahnsen Group, wrote in a client note.
“The Dow is up a stunning 3,000 points in just over three months – it hardly needs an excuse to see volatility elevated.”
The rush to safe haven assets sank U.S. Treasury yields to three-month lows, putting pressure on shares of Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co .
At 10:11 a.m. ET, the Dow Jones Industrial Average dropped 1.39% to 28,587.46.
The S&P 500 fell 1.42% to 3,248.71 and the Nasdaq Composite was down 1.80% at 9,147.23.
The S&P energy index dropped 2.0% as crude price fell below $60 per barrel on fears of slowing oil demand following the outbreak.
Defensive sectors such as consumer staples, real estate and utilities posted minimal losses.
Fourth-quarter earnings season will kick into high gear this week with 141 of the S&P 500 companies expected to report this week including Apple, Microsoft Corp and Boeing Co .
No.1 U.S. homebuilder D.R. Horton Inc rose 2.7% after raising the upper end of its forecast for full-year home sales.
Declining issues outnumbered advancers for a 6.17-to-1 ratio on the NYSE and a 5.13-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and 11 new lows, while the Nasdaq recorded 20 new highs and 68 new lows. (Reporting by Sruthi Shankar in Bengaluru Editing by Saumyadeb Chakrabarty)