Dow Jones Futures Signal Stock Market Rally With Apple, Peloton Leading; Tesla To Export Made-In-China Cars

Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures, signaling a modest stock market rebound after Thursday’s ugly reversal. Apple (AAPL), Tesla (TSLA), Nvidia (NVDA), (AMZN), Microsoft stock and other big techs pointed higher. Peloton Interactive (PTON) jumped on blowout earnings. Tesla stock rallied amid reports that the electric car maker will soon export made-in-China vehicles, even as Volkswagen (VWAGY) begins deliveries of its ID.3 electric hatchback today.


Meanwhile, President Donald Trump said late Thursday that he won’t extend a mid-September deadline for China’s ByteDance to sell the viral video site. “It’ll either be closed up or they’ll sell it,” Trump told reporters. “There will be no extension of the TikTok deadline.”

Dow Jones stocks Microsoft (MSFT) and Walmart (WMT) have teamed up on a bid, while Oracle (ORCL) is another possible suitor. Microsoft and Walmart rose slightly before the open, though it’s unclear how much the TikTok news is driving that. Oracle stock rallied nearly 5%, signaling a move above a buy point after strong earnings late Thursday. But the software giant has been moving sideways for the past three years, lagging the S&P 500 index since 2011.

Apple stock rose about 1% in the premarket, along with Nvidia and Amazon. Adobe advanced 2.5%. Tesla climbed 3%.

Peloton stock soared 11% on its first-ever profit, which was well above views. Revenue spiked 172% while the connected at-home fitness leader sees strong demand continuing.

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Dow Jones Futures Today

Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures climbed 0.4%. Nasdaq 100 futures advanced 0.5%, boosted by Apple, Tesla, Adobe and Oracle. Futures are well off their morning highs.

Futures continued to fade after a hotter-than-expected August consumer price index, with core CPI up 0.4% vs. July and 1.7% vs. a year earlier. This will please the Federal Reserve, but gives policymakers a little incentive to ease further to spur more inflation.

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

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Apple, Tesla, Microsoft, Adobe, Nvidia and Amazon stock are all on IBD Leaderboard. Microsoft and Adobe stock are on the IBD Long-Term Leaders list. Amazon, Adobe, Microsoft and Nvidia stock are on the IBD 50.

Stock Market Rally Shaky

A stock market rally bounce would be encouraging after Thursday’s disappointing action. The Nasdaq rose as much as 1.4% soon after the open, hitting its 21-day exponential moving average. But the index quickly reversed lower, closing with a 2% loss, back below the 50-day moving average. The Dow Jones Industrial Average fell 1.45% in Thursday’s stock market trading. The S&P 500 index lost 1.8%.

Worse, promising early action in big tech and leading stocks also soured. Apple, Microsoft, Amazon, Adobe and Nvidia all reversed lower, below their 21-day lines and sometimes more. Tesla closed slightly higher after slashing a big intraday gain.

But as Thursday’s action showed, a strong open doesn’t necessarily mean that’s how the session will turn out. A strong close would be positive, but wouldn’t substantially change the overall picture. The stock market rally is under pressure, whipsawing on a daily and intraday basis. On the other hand, a weak close, with the Nasdaq undercutting Tuesday’s low and falling significantly below its 50-day line would be a bearish signal.

Don’t forget volume. Over the last five sessions, the lightest trading activity on the Nasdaq came on the sole up day.

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Tesla Exports From China

Tesla is gearing up to export electric cars from its Shanghai plant to Asia and Europe, perhaps by year-end or early 2021, according to widespread reports. The Asian markets could include Singapore, Australia, New Zealand as well as Hong Kong and Japan.

Made-in-China Model 3 electric cars should be substantially cheaper than those built at Tesla’s main factory in Fremont, Calif. But the likely Asian targets aren’t big Tesla markets. Europe is a huge and fast-growing electric car market, but Tesla is already building a new factory in Berlin that could be ready to start production in mid-2021. And Tesla sales may be peaking in Europe due to surging electric car competition.

Competition took another big step Friday as the VW ID.3 electric car begins deliveries today across Europe. While not a direct Model 3 rival, it’s a cheaper option for drivers. The ID.4 crossover, which will compete with the Model Y, will launch in Europe next month, the U.S. this year and China by early 2021.

Meanwhile, made-in-China exports add to questions about Tesla Fremont. Along with the Berlin plant and Austin, Texas, plant coming, will there be sufficient demand for Fremont’s capacity? The relatively quick move for made-in-China exports may not be a great sign for demand in China. The Shanghai plant will also begin making the Model Y later this year.

Of course, if Tesla demand booms, overcapacity won’t be an issue. Once again, Tesla news headlines are compatible with the bull and bear thesis. But something’s gotta give in 2021.

In the meantime, Tesla stock is moving solidly higher early Friday, taking another run at its 21-day moving average.

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

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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