Wall Street fails to stick to recovery gains, ends day lower

• Stocks fail to build on last Friday's strong recovery.
• Technology leads losses on Monday.
• Defensive stocks help to limit losses.

After starting the day modestly lower, major equity indexes in the U.S. tried to retrace their losses but struggled to gather momentum and closed the day in the negative territory led by heavy losses witnessed in tech shares. Additionally, rising geopolitical tensions between Saudi Arabia and the United States after latest reports claimed that Saudis were preparing to publish a report in which they would admit that journalist Khashoggi was killed during an interrogation further weighed on the market sentiment in the last hour of the session.

Commenting on today's market action, "It's almost as if a ceasefire has been called in the market between the bulls and the bears. There is hesitation to make a move in either direction right now and the best term to describe it is probably 'nervous,' Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee, told Reuters on Monday.

Ahead of high-profile third-quarter earnings figures later in the week, the S&P 500 Technology Index dropped 1.64% on the day. On the other hand, the so-called S&P 500 Utilities and Real Estate indexes added 0.35% and 0.51% respectively. 

Meanwhile, the U.S. Department of Treasury today announced that the 2018 (fiscal year) budget deficit rose to its highest level in six years at $779 billion with the deficit-to-GDP ratio rising to 3.9% from 2.5% recorded in 2017 (fiscal year).

The Dow Jones Industrial Average lost 94.35 points, or 0.37%, to 25,245.64, the S&P 500 fell 16.44 points, or 0.59%, to 2,750.69, and the Nasdaq Composite erased 65.54 points, or 0.87%, to 7,431.35.

DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik

The DJIA daily candle has practically no body and long wicks, reflecting the ruling uncertainty. The same chart shows that the index was unable to leave the range determinate by horizontal moving averages, with the 100 DMA capping the upside and the 200 DMA flat at around 25,092 providing a strong psychological support for the upcoming sessions. Technical indicators in the mentioned chart have resumed their declines within oversold levels, keeping the risk leaned to the downside.

Shorter term, and according to the 4 hours chart, the scale is also leaned to the downside, as despite an early advance, above it, the index settled below a strongly bearish 20 SMA. The Momentum indicator lags, stuck around its mid-line while the RSI turned back south, currently at 38 and in line with further slides ahead.

Support levels: 25,161 - 25,092 - 25,040.

Resistance levels: 25,297 - 25,348 - 25,398.