The stock market saw big declines at the open on Monday morning, as a rise in the incidence and death toll from the coronavirus first reported in China raised fears about a larger potential impact on the global economy. With more cases confirmed in the U.S. over the weekend, the odds of a problem that could reach worldwide proportions appears to be increasing. Shortly after the open as of around 10 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 396 points to 28,594. The S&P 500 (SNPINDEX:^GSPC) dropped 43 points to 3,253, and the Nasdaq Composite (NASDAQINDEX:^IXIC) was lower by 153 points to 9,162.

Coronavirus concerns have affected a wide range of industries, from airlines serving global destinations to manufacturing companies that rely on China's labor force for production and distribution. Yet two of the hardest-hit stocks in the market Monday morning reflect the impact that a possible global epidemic might have on companies in the casino gambling industry, as Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) saw their shares drop by 6%.

A double hit on casino stocks

The potential pressures on casino operators from the coronavirus come from several different corners. On one hand, both Las Vegas Sands and Wynn Resorts have extensive holdings of properties in the Asian casino resort capital of Macao, and they've benefited significantly over the past several years from the rising tide of Chinese travelers seeking to take advantage of entertainment and gambling opportunities there. Already, Macao has started to deny entry to visitors from some of the areas of China affected the most by the coronavirus unless they can prove that they are free of the virus with medical documentation. That could have a direct impact on the number of visitors Sands and Wynn see at their resorts.

Skyline with several large buildings at night in front of a bay.

Macao. Image source: Getty Images.

The collateral damage to the Macao operations of these two casino giants could be much larger. Health-conscious travelers already take precautions to minimize the chance of contracting infectious diseases abroad, but a serious outbreak can lead cautious vacationers to choose to stay home rather than venturing out into a possible dangerous situation. If the disease spreads further into Southeast Asia, Japan, or other major players in the region, the secondary effect on Wynn and Sands could be even more devastating.

Will Vegas suffer?

Macao has been a much more important market from a financial perspective for Wynn and Sands than Las Vegas recently, but if the coronavirus outbreak spreads further into the U.S., then their domestic casino operations could also start to see the impact. Vegas benefits greatly from travelers from Asia seeking to visit the favorite U.S. gambling destination, and the combination of would-be visitors changing their minds about international travel and the possibility of travel restrictions imposed by the U.S. could show up in the Vegas numbers that Las Vegas Sands and Wynn Resorts report.

Both Wynn Resorts and Las Vegas Sands had been on the upswing since last summer, as more encouraging results in Asia had investors excited about their futures. Now, though, those rosy prospects are now in doubt, and shareholders are worried that any worsening of the coronavirus outbreak could do even more lasting damage to the casino industry.

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