US Market Sell-Off: S&P 500 closes below key technical level ahead of key earnings, jobs report

US equities continued from where they left off last week as selling pressure continued on Wall Street ahead of key data points, including earnings from street darling Nvidia.

The Dow Jones fell over 550 points to begin the week on a negative note. The index is now down over 1,600 points in the last three sessions, giving up all the 1,300-plus points it gained during a four-day rally preceding the fall.

The S&P 500 fell 0.9% on Monday, while the Nasdaq fell 0.8%. The fall in both the indices was cushioned by a 3.5% surge in Google-parent Alphabet, which rose after Berkshire Hathaway disclosed a stake worth nearly $5 billion in the company. Rest of the big tech shares, including Nvidia, ended lower.

With Monday's session, the S&P 500 closed below its 50-Day Moving Average for the first time in 138 sessions, the second-longest streak this century. Craig Johnson of Piper Sandler projects two scenarios as a result of this - One, the index moves quickly back to its 6,500 support zone, or two, a further fall towards the 200-DMA support of 6,150, before reversing by the end of the year towards its 6,600 target.

Wall Street is also bracing for key data points that could not be released earlier due to the US Government shutdown. The Bureau of Labor Statistics disclosed on Monday that it will be releasing the September jobs report on Thursday, followed by the real earnings report on Friday. The timeline for other macro data releases has not been disclosed yet.

This "data fog" has meant that the Federal Reserve has had nothing to work with ahead of its December 10 policy meeting. Despite this, Fed Governor Christopher Waller called for another rate cut next month as he believes that the monetary policy and labor market situation is hurting low and mid-income households. On the other hand, Fed Vice Chair Phillip Jefferson said that although the risks to the labor market are skewed to the downside, Fed officials must proceed with caution on monetary policy.

As of early Tuesday, the probability of the Fed easing in December is down to 43%, according to the CME FedWatch.

Beyond equities, the slump in Bitcoin continued with the cryptocurrency declining towards the $90,000 mark and turning negative for 2025. Traders are anticipating a free-fall towards the $80,000 mark.

Retail companies such as Home Depot will begin reporting results from later this evening, followed by the big Walmart earnings report on Thursday before market open.