Wall Street stocks sank deeper into the red Tuesday afternoon on mounting fears over the coronavirus and its potential to derail global growth.

After starting the session higher, major US indices quickly reversed course and by mid-afternoon were on track for a second straight rout as US public health officials warned about an inevitable outbreak here and major companies cited the illness as a threat to their business performance.

Near 2010 GMT, the Dow Jones Industrial Average was down 2.7 percent, or 750 points, at 27,210.48.

The broad-based S&P 500 tumbled 2.5 percent to 3,145.16, while the tech-rich Nasdaq Composite Index shed 2.1 percent to 9,027.31.

"Bit by bit, US investors are seeing the prospects for global growth diminish," said Gregori Volokhine of Meeschaert Financial Services.

"With the news of the last three or four days, it's hard to be optimistic."

Wall Street is on track for its second straight rout as US health officials say an outbreak of coronavirus in the country is inevitable
Wall Street is on track for its second straight rout as US health officials say an outbreak of coronavirus in the country is inevitable AFP / Johannes EISELE

American health authorities urged local governments, businesses, and schools to develop plans like canceling mass gatherings or switching to teleworking in preparation for an expected larger outbreak in the US.

"Ultimately, we expect we will see community spread in this country," said Nancy Messonnier, a senior official with the Centers for Disease Control and Prevention (CDC).

"It's not so much a question of if this will happen anymore, but rather more a question of exactly when this will happen, and how many people in this country will have severe illness."

In spite of the CDC statements, White House economic counselor Larry Kudlow said US economic data remained solid and that the ailment remained "very tightly contained in the United States," he said on CNBC.

"It's mostly centered in China," Kudlow said, citing data showing the US economy on track for 2.1 percent growth in the first quarter and citing recent reassuring economic reports.

Earlier statements from major US companies highlighted the impact on company earnings, with United Airlines withdrawing its full-year profit forecast, Mastercard lowering its sales projection and Macy's highlighting the risk to its supply chain.

Coronavirus China