Airlines, travel stocks hit by China virus fears

US stock index futures followed Asian and European markets lower on Tuesday as worries about the fallout from a deadly virus outbreak in China and a gloomy growth outlook from the IMF looked set to stall a record rally on Wall Street.

Officials confirmed the new coronavirus outbreak took six lives and that it could spread between humans, stoking fears of a global pandemic and reviving memories of Severe Acute Respiratory Syndrome (SARS) — another coronavirus that killed nearly 800 people in 2002-03.

With the virus spreading just ahead of Chinese New Year holidays, travel stocks including Delta Air Lines Inc, United Airlines Holdings Inc and American Airlines Group Inc fell about 2% in premarket trading.

Hotel and casino operators Las Vegas Sands Corp and Wynn Resorts Ltd, both of which have large operations in China, dropped more than 5%.

"That (virus outbreak in China) seems to be the biggest negative," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"But it's more of a global sentiment. We may see U.S. markets try to spit it out because it doesn't have that much of an impact on U.S. economy."

A top International Monetary Fund (IMF) official said on Monday that a slowdown in global growth appears to have bottomed out, but there is no rebound in sight. The IMF trimmed its global growth forecasts for 2020 and 2021.

The developments weighed on U.S. investors returning from a long holiday weekend. Strong economic data, the signing of the Phase 1 U.S.-China trade deal and an upbeat start to fourth-quarter earnings season had sent Wall Street to new all-time highs on Friday.

However, U.S. Treasury Secretary Steven Mnuchin told the Wall Street Journal that the Phase 2 trade deal with China would not necessarily be a "big bang" that removes all existing tariffs.

At 8:50 a.m. ET, Dow e-minis were down 62 points, or 0.21%. S&P 500 e-minis were down 10 points, or 0.3% and Nasdaq 100 e-minis were down 30.75 points, or 0.34%.

Halliburton Co slipped 0.9% after the oilfield service provider disclosed a $2.2 billion charge to earnings as weakening North American shale activity continued to hit the industry.

Morgan Stanley slid 1.9% after Citigroup downgraded the stock to "neutral", saying the shares were fairly valued.