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Dow Jones Futures: Apple iPhones Take Center Stage, But Chip Sector Breaks Support

Dow Jones futures edged higher late Tuesday, along with S&P 500 futures and Nasdaq futures. Apple stock and other S&P 500 index giants were solid winners Tuesday, lifting the major indexes. Apple (AAPL) will unveil new iPhones and other products at a Wednesday event. Meanwhile, AMD (AMD) powered to a fresh 12-year high, but Intel (INTC), Micron Technology (MU) and Apple iPhone chipmakers helped push the Philadelphia Semiconductor Index below key support.




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Dow Jones Futures Today

Dow Jones futures rose a fraction vs. fair value. S&P 500 futures and Nasdaq 100 futures were just above break-even. Keep in mind that Dow Jones futures and other overnight action may not translate into actual results in the next regular session.

Apple Is Top Dow Stock In 2018

In Tuesday’s stock market trading, the Dow Jones and S&P 500 index each rallied 0.4%. The Nasdaq composite advanced 0.6%. Apple stock and Amazon.com (AMZN) rose 2.5% Tuesday. Microsoft (MSFT) and Google parent Alphabet (GOOGL), the next two biggest S&P 500 index members, popped 1.7% and 1.3%, respectively. Apple is the top Dow Jones stock so far in 2018, up 32.3%, just ahead of Nike (NKE) at 32.1%. Microsoft stock is the No. 3 Dow performer, up 30%.

But chip stocks were notable losers, even with AMD continuing its big run.

Apple iPhone Event

The Apple product event starts at 10 a.m. PT. CEO Tim Cook is expected to unveil three Apple iPhone models on Wednesday. Analysts predict an update to its 5.8-inch OLED-screen iPhone X. The other new Apple iPhones include a 6.5-inch OLED model and a 6.1-inch LCD-screen handset. Also expect a look at the next-generation Apple Watch and other products.

Apple stock tends to fall on the company’s iPhone event day and week. Shares rose 2.5% on Tuesday, but that snapped a four-day losing streak. Apple stock is up 18% since its July 31 earnings report. Shares rose a fraction in late trade.

Chip Stocks Slump

Even as the Nasdaq composite led stock market averages higher Tuesday, the Philadelphia Semiconductor Index sank 1% to close just below its 50-day moving average for the first time since Aug. 23. The Philly Sox index has struggled for several months, testing its 200-day line several times. Its relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is holding near 2018 lows.

Chip stocks usually lead or take part in market rallies, especially tech-led uptrends. Chip stocks account for a big chunk of the market, especially the Nasdaq. And they’re in virtually every tech product, as well as everything from cars to home appliances. If chip stocks aren’t faring well, it’s a bad sign for many other sectors.

AMD Stock Gain Is Intel’s Pain

AMD stock edged higher Tuesday, up 87% since its July 25 earnings report. But a lot of that gain reflects Intel’s pain. Intel has delayed its next-generation chips, giving AMD a technological edge for an extended stretch. Intel stock has fallen 14% since the chipmaker’s July 26 Q2 report. Shares sank 3% to a seven-month low.

Meanwhile, Micron Technology also slid about 3% to a seven-month low. Analysts continue to downgrade the memory-chip giant on concerns about NAND pricing. That would be bad news for other memory-chip plays, including some big semiconductor equipment makers.

Apple Chipmakers

Meanwhile, Apple iPhone chipmakers Broadcom (AVGO), Qorvo (QRVO) and Skyworks (SWKS) are all well off highs. All three retreated Tuesday, with Skyworks hitting its worst level since January 2017 on Tuesday.

Why the disconnect? Apple is focusing on higher iPhone prices vs. higher quantities, which is good for its profit margins but not for its suppliers’ sales. Also, Apple is relying more on high-margin services revenue, which doesn’t do much for component makers.

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