West Ham United moved out of the relegation zone with a huge 2-0 win against Everton, who suffered their sixth defeat in seven Premier League matches.
A first win in eight matches takes West Ham up to 15th spot with 18 points, one clear of the bottom three. Everton are 19th on 15 points.
Newcastle, who last tasted top-flight defeat at Liverpool in August, were matched by a battling Palace throughout.
Nick Pope then showed rapier-like reactions to push away Jean-Philippe Mateta's ferocious goalbound strike as Palace came close to claiming a 73rd-minute winner. It was Pope's sixth consecutive clean sheet and his 12th of the season, putting him three clear of Aaron Ramsdale in the race for the Castrol Golden Glove.
The point takes Newcastle to within eight points of leaders Arsenal, but having played two matches more.
Palace stay 12th with 24 points.
The Blues thought that they had taken the lead when Kai Havertz scored after only four minutes, but his effort was ruled out for offside following a VAR review.
Mykhailo Mudryk, Chelsea’s record signing, impressed after coming on during the second half but Graham Potter’s side had to settle for a point that keeps them in 10th place, level on 29 points with eighth-placed Liverpool.
Brighton's hopes of moving up to fifth spot were boosted on 27 minutes when Kaoru Mitoma's sublime curling shot put them 1-0 up, his fourth goal in six matches.
The Foxes edged 2-1 ahead through Harvey Barnes, but they were denied a first win in five matches when Ferguson met Pervis Estupinan's cross with two minutes remaining. It was the 18-year-old's third goal in his last four Premier League appearances.
Brighton climb to sixth on 31 points, while Leicester move up to 14th with 18.
Southampton had a goal overturned in either half, the second following a VAR review, in a match that was suspended for 10 minutes when referee Michael Salisbury was alerted to a drone hovering over St Mary's Stadium during the first half.
Watkins' fifth goal of the season, a neat header from Douglas Luiz's corner, ultimately proved decisive.
Villa sit 11th with 28 points, while Southampton stay on 15 points.
The point takes 13th-placed Forest four points clear of AFC Bournemouth, who were up to 14th place at half-time, only to end up third from bottom.
Three more fixtures await on Sunday including a huge encounter at the top of the table.
Arsenal welcome Manchester United to Emirates Stadium, with both sides looking to lay down a marker in their title aspirations.
Victory for Man Utd would put them within five points of the Gunners, but if the hosts win, they would go 11 clear of the Red Devils.
Elsewhere, second-placed Manchester City will look to stay in touch with the league leaders when they host Wolverhampton Wanderers, while Leeds United are aiming to record a first win in six matches when they take on Brentford at Elland Road.