Dow Jones Futures: Apple Strong But Stock Market Rally Fragile; JPMorgan, Proofpoint Falter; Tesla Deliveries Downside

Dow Jones futures rose slightly late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered a sharp reversal Tuesday after a key manufacturing index showed the sharpest factory contraction in 10 years. Apple stock eked a gain, rising in its buy zone. But fellow Dow Jones component JPMorgan Chase  fell back below a buy point, as Treasury yields fell. Proofpoint broke out but then reversed lower. Meanwhile, Tesla delivery and production data are due soon, but record unit figures may not be great news for Tesla revenue.

The S&P 500 index undercut its 50-day moving average, joining the Nasdaq, which briefly reclaimed that key support level after Tuesday’s open.

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value, along with S&P 500 futures. Nasdaq 100 futures climbed 0.1%.

Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. Dow Jones futures did indicate a positive open Tuesday morning, but all that was old news as soon as the ISM manufacturing index crossed the wires at 10 a.m. ET.

The current stock market rally came under even more pressure as deteriorating U.S. manufacturing index activity revived recession fears. The Dow Jones Industrial Average fell 1.3%, close to session lows. The S&P 500 index sank 1.2%, falling below its 50-day line. The Nasdaq composite, which briefly reclaimed its 50-day soon after the open, reversed sharply lower to lose 1.1%.

Intraday, Apple rose to a 2019 high of 228.22 intraday, not far from its Oct. 3, 2018, peak of 233.47. Apple stock pared gains but still closed higher, up 0.3% to 224.59, providing some support for the Dow Jones, S&P 500 and Nasdaq. The relative strength line for Apple stock hit an 11-month high. Apple stock reclaimed a 221.47 flat-base buy point on Monday.

But JPMorgan Chase stock fell 1.8% to 155.55, below a 117.34 buy point. JPMorgan stock and several other financials broke out last month as the 10-year Treasury surged. But yields have pulled back somewhat in recent weeks. On Tuesday, the 10-year Treasury yield reversed sharply lower.

Growth stocks didn’t stand out, for good or ill. Among the best ETFs, the Innovator IBD 50 ETF slid 1%. The iShares Expanded Tech-Software Sector ETF fell 1.1%. The VanEck Vectors Semiconductor ETF sank 0.7%.

Proofpoint Stock Breakout Fizzles

Proofpoint stock shot up to a record 133 soon after the open, vaulting past a 128.98 cup-with-handle buy point. But with the stock market selling off, shares quickly reversed lower. closing down 0.4% at 128.59.

Proofpoint stock had a couple of things going for it. It’s one of several software stocks that had been setting up after lagging for much of the year. Also, cybersecurity stocks did OK on a fairly miserable day.

But when the stock market rally is under increasing pressure, even leading stocks will struggle.

Stock Market Rally Fragile

The Dow Jones today managed to avoid undercutting its 50-day line, but only just. The S&P and Nasdaq are already through that key support. While Apple stock is working for now, more breakouts are faltering like those of JPMorgan stock and Proofpoint stock. While one strong stock market session could dramatically improve the technical picture, another big sell-off could ice the stock market rally.

The September jobs report is due Friday, with China trade talks on tap next week, with the risks arguably to the downside for the fragile stock market rally. Employment tends to be a lagging economic indicator, so investors may not take too much solace from a solid jobs report and could turn bearish on another weak hiring figure. Investors have been quietly hoping for a China trade truce, thus avoiding an Oct. 15 Trump tariff hike.

Meanwhile, the Trump impeachment inquiry offers a steady stream of headlines. Trump impeachment hasn’t take much toll on the stock market so far, but it adds a new layer of uncertainty for Wall Street heading into the 2020 election.

Tesla Stock

Tesla reports quarterly production and delivery figures within the first three business days of the quarter’s end, so results should be coming by Thursday. Analysts expect Tesla deliveries of more than 98,000 electric vehicles, another company record. CEO Elon Musk has raised the possibility of clearing 100,000. But an ever-higher share of those sales are for the cheaper Tesla Model 3, and lower-priced versions of the entry-luxury sedan at that. That is weighing on Tesla revenue and profitability. Tesla stock edged lower.

Third-quarter revenue is expected to fall 6.6% to $63.75 billion, which would be the first year-over-year decline in seven years. Tesla has already slashed capital spending and R&D to multiyear lows, so that short-term method of preserving cash has largely run its course.

Tesla stock rose 1.5% to 244.56 on Tuesday, continuing to consolidate above its 50-day but below its 200-day line. The RS line for Tesla stock has risen slightly, but isn’t far from May’s six-year low.

During Tuesday’s session, news broke that Tesla is buying DeepScale, a computer vision startup. DeepScale’s technology and talent could help Tesla develop fully autonomous vehicles.

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