Stock market outlook: Wall Street kicked off the week on a downbeat note as a wave of risk-off sentiment swept across markets, sending both stocks and Bitcoin sharply lower, as per a report. The Dow slid 557 points, or 1.18%, while the S&P 500 dropped 0.92% and the Nasdaq Composite slipped 0.84%, as per the CNN report.

Stock Market Fear Spikes as VIX Jumps and Sentiment Hits “Extreme Fear”

Market anxiety was evident across sentiment gauges. The VIX, Wall Street’s fear index, jumped 13%, and CNN’s Fear and Greed Index sank into “extreme fear,” touching its lowest level since early April, as per the report.

Investors Brace for Nvidia Earnings and Delayed Jobs Report

The shaky start comes as investors brace for two market-defining moments this week. Nvidia, the powerhouse of the AI boom and now one of the most influential stocks in the S&P 500, will report earnings on Wednesday, reported CNN.

That will be followed on Thursday by the long-delayed September jobs report, postponed due to the government shutdown, as per the report.

Together, these events may help investors gauge whether markets are headed toward a bullish recovery or deeper volatility, as per the CNN report.

José Torres, senior economist at Interactive Brokers, said the numbers will offer key insight into the concerns “top of mind” for Wall Street, as quoted in the report.

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Tech Stocks Under Pressure as Valuation Concerns Grow

Tech stocks, central to this year’s rally, have been under pressure amid worries about lofty valuations and hefty spending plans across the sector, according to the CNN report. The Nasdaq is now down nearly 5.5% from its late October record high, a sign investors are questioning whether the AI-driven surge can hold, as per the CNN report.

Bitcoin Price USD Drops Below $90,000, Crypto Stocks Follow

Meanwhile, bitcoin (BTC) added to the gloom, plunging below $90,000 for the first time in seven months, reported CNN. The cryptocurrency has now shed more than 28% in six weeks after hitting an all-time high above $126,000 in early October, as per the report. Crypto-linked stocks mirrored the slump, with Coinbase dropping 7%.

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S&P 500 and Nasdaq Break Key Technical Levels

The selling pressure pushed the S&P 500 and Nasdaq below their 50-day moving averages, key technical support levels, as per the CNN report. Craig Johnson, chief market technician at Piper Sandler, cautioned that “While the long-term uptrend is intact, we believe a corrective pullback/consolidation phase is already underway after the market’s six-month winning streak,” as quoted in the report.

The turbulence follows an already volatile week, during which tech stocks were battered before before investors swooped in on Friday to buy the dip, reported CNN.

NVDA’s Earnings May Be the Week’s Biggest Market Catalyst

Now, investors are waiting to monitor Nvidia's (NVDA) earnings. With the chipmaker accounting for roughly 8% of the S&P 500’s market value, its earnings could have an outsized influence on market direction, as per the report. Nvidia shares fell 1.83% on Monday, adding pressure to the broader indexes, reported CNN.

Chris Larkin, managing director at Morgan Stanley’s E-Trade, said that, “The monthly jobs report would normally dominate this week’s economic calendar, but with the AI trade struggling the past couple of weeks, Nvidia’s earnings are once again looking like a key piece of the market’s momentum puzzle,” as quoted by CNN.

Fed Rate Cut Expectations Fade as Inflation Concerns Grow

Adding to the uncertainty, expectations of a December Federal Reserve rate cut have faded. Traders now see a 45% chance of a cut, down sharply from 94% a month earlier, as the Fed contends with stubborn inflation, as per the report. That shift is testing the recent stock market rally, which had been built on hopes of easing monetary policy.

Mohit Kumar, chief strategist and economist for Europe at Jefferies, said that, “Data releases starting this week should provide a clearer picture for one of the key risks over the coming weeks — the December Fed meeting,” as quoted by CNN.

Investors Rotate Out of Tech and Into Other Sectors

At the same time, investors have been rotating out of high-flying tech names and into more affordable, lagging sectors. Sam Stovall, chief investment strategist at CFRA Research, described the shift as, “This rotation is both expected and welcome, as it should unwind some of the frothiness … and allow this bull market the opportunity to catch its breath before resuming its advance," as quoted in the report.

FAQs

Did BTC price fall below $90,000?
Yes. Bitcoin has been sliding for six weeks and dropped again on Monday, losing over 28% from its record highs.

Is the market entering a correction?
Some analysts say a pullback is underway, but the long-term trend is still intact for now.