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* Airlines, casino stocks hit by extended China holidays
* Banks follow U.S. Treasury yields lower
* Crude slips below $60, energy shares down
* Indexes down: Dow 1.38%, S&P 1.36%, Nasdaq 1.69% (Changes comment, updates prices)
Jan 27 (Reuters) - Wall Street’s main indexes fell more than 1% on Monday as investors worried about the economic fallout of a virus 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.
“There’s been an overabundance of bullishness ... The market is overdue for a correction,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab in Austin, Texas.
“If you’ve made a pretty good profit since October, it’s probably not a bad move at all to sell.”
At 11:58 a.m. ET, the Dow Jones Industrial Average slipped 1.38% to 28,589.26. The S&P 500 fell 1.36% to 3,250.50 and the Nasdaq Composite dropped 1.69% to 9,157.36.
Apple Inc, Microsoft Corp, Alphabet Inc and Amazon.com Inc dropped between 1.6% and 3%.
Wynn Resorts Ltd, Melco Resorts & Entertainment Ltd and Las Vegas Sands Corp, which have large operations in China, slid between 3.7% and 6.9%. The NYSE Arca Airline index dropped 3.0%.
The iShares China Large-Cap ETF shed 4.3%.
Yum China Holdings Inc slid 4.4% 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 rush to safe haven assets sank U.S. Treasury yields to three-month lows, putting pressure on lenders. The S&P 500 banks index was down 1.4%.
The S&P energy index dropped 2.5% as crude price fell below $60 per barrel on fears of slowing oil demand following the outbreak.
Defensive sectors such as consumer staples edged up, while 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 2.5% after raising the upper end of its forecast for full-year home sales.
Declining issues outnumbered advancers for a 4.08-to-1 ratio on the NYSE and a 2.86-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and 12 new lows, while the Nasdaq recorded 27 new highs and 82 new lows. (Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru Editing by Saumyadeb Chakrabarty)
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