Monday’s selloff in U.S. stocks was accompanied by a troubling development that could signal more selling pressure on the way.
The S&P 500 and Nasdaq Composite closed at their lowest levels in a month and below their 50-day moving averages, according to Dow Jones Market Data. The S&P 500 fell 61.70 points, or 0.9%, to finish at 6,672.41, which was below its preliminary 50-day moving average of 6,708.39. The Nasdaq Composite dropped 192.51 points, or 0.8%, to end at 22,708.07, which was below its preliminary 50-day moving average of 22,855.22.
Even more worrisome, both the S&P 500 and Nasdaq Composite ended below those averages for the first time in many years. For the moment, though, the current selloff in equities appeared to be letting some froth out of the market without endangering the three-year bull run in stocks, according to Sam Stovall, the Pennsylvania-based chief investment strategist for CFRA Research.
The S&P 500 had consistently closed above its 50-day moving average from May 1 through last Friday — marking 138 consecutive trading days. But on Monday, the index snapped its longest stretch above this average since the 149-trading-day period that ended on Feb. 26, 2007.
The S&P 500 ended below its 50-day moving average on Monday.
Like the S&P 500, the Nasdaq had consistently closed above its 50-day moving average from May 1, 2025, through last Friday’s session — marking 138 consecutive trading days. But on Monday, it snapped its longest stretch above the 50-day moving average since the 187 trading days that ended on Oct. 2, 1995.
“When the price of a stock or index breaks below its 50-day moving average, it’s an indication of near-term weakness that implies the potential for further weakness,” Stovall said via phone on Monday. In addition, “it signals the potential to fall below the 200-day moving average, which would imply a longer-term and deeper decline overall.”
At that point, “people would begin to worry that we could see a correction or a bear market,” the strategist said.
Importantly, retail investors in the past few weeks have been de-risking their books, said Adam Turnquist, chief technical strategist at LPL Financial. In addition, dip buyers have taken a pause and weren’t showing up as the S&P 500 fell below its 50-day moving average.
“That’s what we’ve been watching for and waiting for,” Turnquist told MarketWatch.
Finally, the rotation under the surface of the stock market also has gotten defensive, as shown by the recent rally in healthcare and energy stocks.
“I would call that early signs of a character change of this seven-month rally,” he said, referring to the powerful rally since the April lows that followed President Donald Trump’s tariff announcements.
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