Apple's margin forecast weighs on Dow Jones Industrial Average

• October 14 low revisited as DJIA erases Monday's entire advance.
• Three-session losing streak ends for Nasdaq and S&P 500 as chip shares advance.
• Friday's October payrolls follow the midterm vote count ahead of Wednesday.

The Dow Jones Industrial Average is trading near 51,700. Having erased Monday's entire advance, it sits just below Friday's close. The session trough near 51,500 marks its lowest level since October 14. In contrast, chip shares are pushing the Nasdaq Composite and S&P 500 higher on Tuesday following three consecutive declining sessions.

Disappointing results from Apple (AAPL) on Monday are dragging on the Dow. Analysts were underwhelmed by its gross margin forecast and fiscal fourth-quarter iPad sales, both of which fell short of estimates. Following the release, HSBC lowered its Apple share-price forecast by $6 to $360.

Ahead of its third-quarter earnings release, Advanced Micro Devices (AMD) is advancing alongside Broadcom (AVGO), Micron (MU) and Nvidia (NVDA). Monday saw the opposite pattern: the Dow gained while the Nasdaq Composite lost more than 1%. The NASDAQ 100 remains about 10% off its recent peak, compared with a decline of less than 6% for the Dow from its August high.

Election and data calendar

Counting of US midterm votes follows the close of Tuesday's polls. Investors can first trade the results on Wednesday, when the outcome will determine control of the House and Senate from January. Prediction markets assign Democrats a near 75% chance of winning the Senate. Investors and analysts said equities have yet to price in a Democratic sweep of both chambers.

Wednesday brings the October employment count from Automatic Data Processing (ADP) at 13:15 GMT, with 69K forecast against the previous 90K. The Institute for Supply Management (ISM) services index is scheduled for 15:00 GMT, with a forecast of 54.8. Friday's October Nonfarm Payrolls (NFP) report follows at 13:30 GMT, with 65K expected after 29K. Both employment counts will inform the Fed's December interest-rate decision.

Technical outlook

About half of the advance from just above 50,500 on October 1 has been retraced by the retreat from the late-October peak near 52,900. For a third session, the index trades below its 50-day Exponential Moving Average (EMA), near 52,100. The 200-day EMA stands near 50,750. Daily momentum has eased out of overbought territory after spending most of October's second half there.

Dow Jones: daily price chart