Yohan Cabaye ended Newcastle's 41-year wait for an Old Trafford victory as he netted the winner on Saturday, condemning United to their second successive home defeat for the first time since 2002.
The result has left David Moyes' side ninth in the table, seven points off the Champions League places and 12 behind leaders Arsenal, who take on Everton on Sunday and could yet pull further clear.
Asked if United were now out of the running for the title, Stepney told BBC Radio 5 Live's Sportsweek: "I would say yes, but I don't think they're out of the top four - but funnier things have happened."
United fell to three league defeats in September - away to rivals Liverpool and neighbours City, before a shock 2-1 loss at home to West Brom - but until they were beaten by Everton on Wednesday night they had enjoyed an unbeaten run of 12 matches in all competitions.
Stepney, who made 433 league appearances for United between 1966-1978, hopes his former side can get back to winning ways after collecting just two points from their last four league games.
He added: "It's just one of those things, it's embarrassing that we can't score goals, we've hit the post and hit the bar and had it knocked off the line and it's one of those things.
"We were aware we hadn't lost for 12 games and all of a sudden these two have come along straight away and (it was) probably unexpected but it's just one of those things."
Stepney was at United when Sir Matt Busby retired in June 1969 and was replaced by Wilf McGuinness, and compared that to Sir Alex Ferguson's departure over the summer, which led to Moyes taking charge.
But he believes Moyes is in a more difficult position.
Stepney added: "That was 44 years ago. The game is different and the world has changed since then and football has changed immensely since then.
"In those days there were only 14 players in the first-team squad and Wilf McGuinness, who was reserve team manager, came in and took over the job and he knew everything that was going on, he knew every player and he knew how he wanted to try and replace the great Sir Matt Busby.
"Back then players were very loyal to the club and now... what manager has ever come into a team that are champions in what is probably the best league in the world and what can he do? He can't say 'I don't want you, I don't want you, I'm going to transfer you before the start of next season'.
"He couldn't do that because they're the champions. He's in a bit of a pickle really in that respect but he tried to get players in but it didn't materialise."