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    Dow Jones Futures: Market Rally Tested On Ugly Treasury Auction; JPMorgan, UnitedHealth Due

    Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC), PNC Financial Services (PNC), BlackRock (BLK) and UnitedHealth (UNH) are set to report Friday morning.




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    The stock market rally retreated after Treasury yields rebounded. Blame a CPI inflation report that was hotter than expected in some areas, followed by a poorly received 30-year Treasury auction. The major indexes did come well off afternoon lows, but overall breath was overwhelmingly bleak.

    Investors should be paying close attention with the Nasdaq and S&P 500 at key levels, ready to expand or reduce exposure.

    Among megacap stocks, Apple (AAPL) edged higher while Microsoft (MSFT), both around possible buy points. Google parent Alphabet (GOOGL) Meta Platforms (META) fell, but from 52-week highs. Nvidia (NVDA) nudged higher after paring gains. Amazon.com (AMZN) hit key resistance while Tesla (TSLA) fell modestly.

    Earnings

    JPMorgan, Citigroup, Wells Fargo, Citigroup and PNC Financial report Friday morning, with concerns about interest rates, investment banking and deposits. The yield curve has become less inverted, which is positive, but the overall run-up in market rates will curb lending. Bank deposits may continue to see outflows, though that may be more of an issue for superregionals such as PNC as well as smaller financials.

    BlackRock is under pressure in a tough time for many asset managers.

    UnitedHealth, kicking off results for health insurers, should see steady growth.

    UNH stock is coming up to a six-month high within an 11-month consolidation, with strong gains over the past few weeks. The financial stocks look bad to terrible, though JPM stock could look interesting with a strong earnings reaction.

    Nvidia stock, Tesla and Meta are on IBD Leaderboard. Meta stock is on SwingTrader. UNH stock and Microsoft are on the IBD Long-Term Leaders list. Nvidia and Tesla stock are on the IBD 50.

    Dow Jones Futures Today

    Dow Jones futures advanced 0.1% vs. fair value. S&P 500 futures rose 0.15% and Nasdaq 100 futures climbed 0.2%.

    The 10-year Treasury bond yield tilted down to 4.68%.

    Crude oil futures rose a fraction.

    Hong Kong’s Hang Seng index fell more than 1%. China’s September consumer prices were flat vs. a year earlier, lower than views for a 0.2% gain. Producer prices sank 2.5%, a little more than views, but up from August’s 3% decline.

    Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


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    Stock Market Rally

    The stock market rally started off slightly higher on the major indexes, reversed sharply lower as Treasury yields kept surging, but then pared losses. Volume rose, especially on the Nasdaq.

    The Dow Jones Industrial Average fell 0.5% in Thursday’s stock market trading. The S&P 500 index land Nasdaq composite sank 0.6%.

    Thursday’s declines followed four straight gains. But the indexes are struggling at key levels.

    The Nasdaq fell back below its 50-day line. The Dow Jones once again hit resistance at the 200-day. The S&P 500 fell below its 21-day moving average intraday, but closed just above that level.

    Meanwhile, the underlying action was even worse. Losers trumped winners 3-to-1 on the Nasdaq and 5-to-1 on the NYSE.

    The small-cap Russell 2000 and Invesco S&P 500 Equal Weight ETF (RSP), which had been hitting resistance at its fast-falling 21-day line, tumbled 2.23% and 1.25% respectively. Both are close to recent and even 2023 lows.

    The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) sank 0.9%, falling back 50-day line. The Nasdaq 100 slipped just 0.35% still above its 50-day.

    U.S. crude oil prices fell 0.7% to $82.91 a barrel. Gasoline futures sank 2% to a 2023 closing low.

    The 10-year Treasury yield surged more than 11 basis points to 4.7%, also fueling a big gain in the U.S. dollar. The 10-year Treasury yield bounced on the CPI inflation, then pushed higher on a 30-year Treasury bond auction. The auction saw weak demand and surging yields.

    The stock market rally had benefited greatly from the retreat in Treasury yields and the dollar. So those sharp gains are worrisome. If the 10-year Treasury bond yield moves back up to recent 16-year highs, the uptrend could face real challenges.

    ETFs

    Among growth ETFs, the Innovator IBD 50 ETF (FFTY) slumped 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) declined 0.4%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) rose 0.5%. NVDA stock is the No. 1 SMH component.

    Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 3.6% and ARK Genomics ETF (ARKG) sold off 5.7%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.

    SPDR S&P Metals & Mining ETF (XME) skidded 3.2%. U.S. Global Jets ETF (JETS) descended 2.3%. SPDR S&P Homebuilders ETF (XHB) stepped down 3.8%. The Energy Select SPDR ETF (XLE) edged up 0.1%. The Health Care Select Sector SPDR Fund (XLV) gave up 0.9%, with UNH stock a major holding.

    The Industrial Select Sector SPDR Fund (XLI) declined 0.9%

    The Financial Select SPDR ETF (XLF) fell 0.6%. JPM stock, Citigroup, Wells Fargo, BlackRock and PNC Financial are all XLF members.


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    Megacap Stocks

    Apple stock rose 0.5% to 180.71, moving a little further above its 50-day line. Shares have a 189.98 double-bottom buy point, but are flirting with downward-sloping trendline entry.

    Microsoft stock dipped 0.4% to 331.16, but still above the 50-day line and just above a downward-sloping trendline. Investors could use 340.86 as another early entry, with 366.78 the official buy point. Microsoft earnings for fiscal Q1 2024 are due Oct. 24.

    Google stock reversed from a 52-week high to fall 1.1% to 138.97. Arguably, GOOGL stock is still in range from its 50-day line. Google earnings are set for Oct. 24.

    Meta stock sank 1.1% to 324.16, falling from a 52-week high after a big four-day run. The Facebook and Instagram parent is still in range from a 312.87 entry. Meta earnings are on Oct. 25.

    Nvidia stock edged up 0.3% to 469.45, after hitting 476.05 intraday. Shares are still in range from the 50-day line. The official cup-base buy point is 502.66.

    Amazon stock for a fifth straight session, up 0.4% to 132.33, but pared gains after hitting resistance at the 50-day line. A decisive move above the 50-day line could offer an early entry. The e-commerce and cloud-computing giant has earnings on Oct. 26.

    Tesla stock fell 1.6% to 258.87, finding support at the 21-day line. The EV giant has a 278.98 cup-with-handle buy point. But a move above Tuesday’s high of 268.94 would break a trendline from the start of the consolidation. Tesla earnings are due Oct. 18.

    What To Do Now

    Thursday’s downside reversal is why it’s a good idea to add exposure gradually vs. in a big flurry.

    Aside from some big techs, the market seems to be hitting resistance, at least in the short run. Investors, especially those who were aggressive in recent days, need to be ready to pare or exit positions if they falter. The S&P 500 and Nasdaq falling below their 21-day lines would be a negative sign.

    Still, stocks could easily rebound. The Nasdaq decisively clearing the 50-day line — and the S&P 500 following suit — would likely offer a number of buying opportunities. So have your watchlists ready.

    Earnings season is about to kick in, adding a huge amount of uncertainty. Know the earnings dates for your holdings and potential buys, but also for key rivals, customers or suppliers.

    Chip-equipment makers Applied Materials (AMAT), KLA Corp. (KLAC) and Lam Research (LRCX) all made bullish moves Wednesday morning. But Lam Research and ASML (ASML) reports next Wednesday, with huge customer Taiwan Semiconductor (TSM) due a day later. So while AMAT stock doesn’t have earnings due in the next month, it still has plenty of near-term earnings risk.

    Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

    Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.

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