Federal Reserve Chairman Jerome Powell made a rare mainstream media appearance in an interview with "60 Minutes" earlier Monday, further shattering widespread market expectations of a rate cut on the rocks of reality. U.S. data further dampened expectations of a rate cut as U.S. services purchasing Managers' Index (PMI) data showed economic activity picking up for a fourth straight month, while service provider inflation rose as activity led to higher prices.

Federal Reserve Chairman Jerome Powell further dampened market expectations for a rate cut when he said in an interview on "60 Minutes" that it was "not job done" on inflation, as the U.S. central bank chief struck a cautious tone and reiterated recent warnings, That is, market expectations for rate cuts have outpaced the Fed's willingness and ability to do so.

The January ISM services Purchasing Managers' Index (PMI) hit a four-month high of 53.4, beating expectations of 52.0 and beating the previous month's 50.5 (revised to 50.6). The ISM service sector price paid index also moved sharply higher in January, climbing to 64.0 from 56.7 the previous month (revised to 57.4).

With the rest of the week's economic data calendar showing US secondary data releases, the market will turn to major stock earnings to drive sentiment. The CME FedWatch tool shows that the market is now pricing in just a 16% probability of a Fed rate cut in March, down sharply from the more than 80% probability in money markets in December. The probability of a rate cut in May has also been sharply reduced, and the market is almost divided on whether the Fed will cut rates at the May meeting.

The Nasdaq Composite lost 0.2%, or 31.28 points, to close at 15,597.68. The S&P 500 fell more than 15 points, or 0.32%, to close at 4,942.81. The Dow Jones Industrial Average fell the most on the day, losing 0.71 percent, or 274 points, to close at 38,380.12.

S&p 500 technical outlook

The S&P 500 fell below the 4,960.00 mark Monday, pulling back from Friday's high of 4,973.10. The intraday trend remains bullish, trading above the 200-hour simple moving average (SMA) near 4,870.00.

Despite the recent bearish pressure, the S&P 500 remains firmly on top of the bull market, with the S&P 500 continuing to test the 5,000.00 daily line and requiring a 10 percent decline to test below the 4,500.00 bearish zone below the 200-day average.