S&P 500 (SPX/USD): Index Plunges Nearly 2% as Rate Cut Expectations Drop
Key Highlights
- S&P 500 suffers brutal 1.66% decline in worst day since October 10
- Tech selloff intensifies as December rate cut odds drop from 63% to 51%
- White House warns some October economic data may never be released
Market Overview The S&P 500 plummeted 1.66% on Thursday to close at 6,737.49, marking the worst day for US equities since October 10 as technology stocks faced renewed pressure and investors rapidly recalibrated Federal Reserve rate cut expectations. The benchmark index decisively broke below key support levels in a dramatic reversal from the record-chasing behavior seen earlier this week.
The selloff was broad-based but particularly severe in technology and communication services. The Nasdaq Composite bore the brunt of the damage, plummeting 2.29% to close at 22,870.36—its third consecutive daily decline. The Dow Jones Industrial Average, which had closed at a record above 48,000 just one day earlier, plunged 797.60 points (1.65%) to settle at 47,457.22.
A critical catalyst for the decline was the sharp recalibration of Fed rate cut expectations. Markets are now pricing just a 51% chance of December easing—down dramatically from 62.9% a day earlier according to the CME FedWatch Tool. This represents a material shift that removes a key support pillar for equity valuations, particularly for high-growth technology stocks.
The shift stems from growing recognition of the Fed’s post-shutdown challenges. White House press secretary Karoline Leavitt’s announcement that key October economic reports—including jobs and inflation data—may never be released creates unprecedented uncertainty about the central bank’s ability to make truly data-dependent decisions.
Some market participants view the selloff constructively. Ron Albahary from Laird Norton Wealth Management characterized Thursday’s pullback as “healthy” and a “natural consolidation,” suggesting the rotation out of high-valuation AI stocks could represent a healthy broadening of market leadership rather than the start of a deeper correction.
Carol Schleif from BMO Private Wealth warned about potential “market chop over the coming weeks as the government gears and economic data presses get turning again,” highlighting the uncertainty that lies ahead as delayed datasets begin filtering into the market.
Technical Outlook (4H)
- Current Price: 6756.84
- Stochastic deep in oversold territory—signals strong bearish momentum
- Price decisively below 20-period moving average—confirms trend shift
- Break below key support levels suggests potential for deeper correction
Key Levels
| Resistance | Support |
|---|---|
| 6794.59 | 6714.22 |
| 6838.27 | 6673.16 |
Fremora Takeaway The S&P 500’s brutal 1.66% decline represents a significant shift in market sentiment following the recent rally to near-record levels. The technical picture has deteriorated markedly, with price below the 20-period moving average and momentum indicators in oversold territory. While this condition typically suggests a short-term bounce could emerge, the fundamental backdrop has weakened with the sharp drop in December rate cut odds. The index faces a critical test at 6714.22 support—holding this level might allow for stabilization, while a break below could accelerate declines toward 6673. Today’s Fed speakers (Logan and Bostic) could provide the next directional catalyst—any acknowledgment of the unprecedented data challenges would support a technical bounce toward 6794 resistance, while hawkish rhetoric would likely extend the decline.
CRUDE OIL (WTI): Bulls Find Modest Support Despite Equity Market Collapse
Key Highlights
- WTI crude regains some composure after Wednesday’s sharp decline
- Potential Russian oil sanctions provide temporary support
- Oversupply concerns continue to limit upside potential
Market Overview WTI crude oil prices stabilized Thursday following Wednesday’s sharp decline, briefly surpassing $59.00 as traders weighed potential sanctions on Russian oil against persistent global oversupply concerns. The commodity’s modest recovery from three-week lows demonstrates some resilience, though gains remain limited by fundamental headwinds.
Oil’s bounce occurred against a backdrop of brutal equity market weakness, with the S&P 500 plunging 1.66%, the Nasdaq tumbling 2.29%, and the Dow dropping 797 points in their worst day since October 10. This divergence between risk assets suggests that crude-specific factors—particularly geopolitical considerations around Russian sanctions—are providing temporary support despite the risk-off tone.
The resolution of the government shutdown brings both clarity and confusion to energy markets. While official Energy Information Administration (EIA) data should eventually resume, the White House announcement that some October reports may never be released creates uncertainty about the completeness of petroleum statistics going forward.
The sharp recalibration of Fed rate cut expectations—with December odds dropping from 62.9% to 51% in just one day—adds complexity. Reduced expectations for near-term easing typically support the Dollar, which would pressure oil prices. However, the DXY continues challenging monthly lows near 99.00, suggesting currency markets remain focused on the longer-term dovish trajectory.
The fundamental backdrop remains challenging, with global production capacity elevated while demand growth—particularly from China—continues disappointing expectations despite Beijing’s various stimulus measures.
Technical Outlook (4H)
- Current Price: 59.88
- Stochastic in middle territory after rising from oversold—suggests stabilization
- Price consolidating below 20-period moving average—maintains bearish bias
- Recovery from three-week lows shows potential short-covering
Key Levels
| Resistance | Support |
|---|---|
| 61.19 | 58.53 |
| 62.25 | 57.41 |
Fremora Takeaway WTI crude oil’s modest recovery to near $60 suggests stabilization after Wednesday’s sharp decline, though the technical structure remains bearish with price below the 20-period moving average. The consolidation around current levels reflects the market’s indecision—caught between geopolitical support from potential Russian sanctions and fundamental concerns about global oversupply. Immediate resistance at 61.19 represents the first significant hurdle, with the more important 62.25 barrier beyond. The oversold bounce appears to be losing momentum, and crude remains vulnerable to renewed selling pressure if global growth concerns intensify. The complex data landscape following the shutdown resolution adds uncertainty, with potential for increased volatility as markets assess what delayed reports reveal about petroleum demand during the extended government closure.
Disclaimer The analysis provided is purely for informational purposes and does not constitute investment advice. Trading and investing involve substantial risk, and past performance is not indicative of future results. Fremora analysts strive for accuracy but make no representations regarding the completeness or accuracy of the information. Readers should conduct their own research and consult with a licensed financial advisor before making investment decisions.
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