Stocks and bitcoin decline as investors await Nvidia earnings report

Wall Street experienced significant losses at the start of the week as stocks tumbled amid rising investor anxiety. Major indexes posted sharp declines, with the Dow Jones Industrial Average falling 557 points, or 1.18%, while the S&P 500 dropped 0.92% and the Nasdaq Composite slid 0.84%. The stock market downturn reflected a broader risk-off sentiment spreading through financial markets.

Market volatility indicators surged during Monday’s trading session. The VIX, commonly referred to as Wall Street’s fear gauge, jumped 13%, according to market data. CNN’s Fear and Greed index traded in “extreme fear” territory and reached its lowest level since early April, signaling heightened investor concern.

Key Events Driving Stock Market Uncertainty

Investors remained on edge ahead of two critical events scheduled for this week. Nvidia, the artificial intelligence chipmaker that has become emblematic of the AI boom, is set to report quarterly earnings on Wednesday. Additionally, the long-delayed September jobs report, postponed due to the government shutdown, will be released on Thursday.

These upcoming announcements will provide crucial insight into issues currently dominating Wall Street’s attention, according to José Torres, senior economist at Interactive Brokers. The combination of corporate earnings and employment data has created a cautious atmosphere among market participants.

Technology Stocks Under Pressure

Technology stocks have faced mounting pressure throughout the month as investors grow concerned about elevated valuations and massive spending commitments by major tech companies. The tech-heavy Nasdaq has declined nearly 5.5% since reaching a record high in late October, reflecting broader skepticism about the sector’s recent momentum.

Investors are attempting to determine whether the AI investment thesis remains sound and whether the Federal Reserve will pause its interest rate reduction cycle at the December policy meeting. These questions have contributed to increased market volatility and uncertainty about the sustainability of recent stock market gains.

Cryptocurrency Decline Adds to Market Woes

Meanwhile, bitcoin plunged below $90,000 on Monday for the first time in seven months, erasing all gains accumulated this year. The cryptocurrency has crashed more than 28% in just six weeks after hitting a record high above $126,000 in early October, according to market data.

Tech and cryptocurrency-related stocks led the S&P 500 lower during Monday’s session. Coinbase, a prominent crypto exchange, fell 7%, highlighting the spillover effect from digital asset weakness into equity markets.

Technical Levels and Market Outlook

The S&P 500 and Nasdaq both dipped below their 50-day moving averages on Monday, according to FactSet. This technical threshold represents a key support level that market analysts monitor closely for signs of trend changes.

However, some strategists maintain a measured perspective on the recent pullback. “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,” Craig Johnson, chief market technician at Piper Sandler, said in a note.

Nvidia Earnings Take Center Stage

Investors are preparing for Wednesday’s Nvidia earnings announcement, which could significantly impact market direction. The chipmaker accounts for roughly 8% of the S&P 500’s market value, making its quarterly results particularly consequential. Nvidia shares fell 1.83% on Monday, contributing to broader market weakness.

“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,” Chris Larkin, managing director at Morgan Stanley’s E-Trade, said in an email.

Federal Reserve Rate Cut Speculation

The recent stock market rally faces additional challenges as investors adjust expectations regarding Federal Reserve policy. Traders are pricing in just a 45% chance that the Fed will cut rates in December, according to CME FedWatch. That probability has fallen sharply from 94% one month ago.

Additionally, investors have begun rotating out of high-flying technology stocks into sectors that appear relatively affordable. This shift reflects changing market dynamics as participants seek value opportunities beyond the concentrated technology leadership that dominated recent months.

Market participants will closely monitor this week’s data releases for guidance on the Federal Reserve’s December policy meeting. The combination of Nvidia’s earnings results and the delayed jobs report should provide clearer direction for stocks in the coming sessions, though significant uncertainty remains about near-term market trends.