Stocks hammered and the “broker battles” heat up!

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Stock Market Update Tuesday, October 1st, 2019

Stocks opened higher and rallied in the morning.

But after a positive start, stocks quickly reversed after 10am ET.

Today’s sell-off came after ISM Manufacturing PMI came out at its worst level in 10 years (June 2009).

The report, which reflects economic activity in the manufacturing sector for September, had a reading of 47.8 vs. a forecast of 51.2 (below 50 indicates contraction). It was the 2nd month in a row that the reading showed manufacturing contraction.

Down more than 1.0% the S&P closed back below its 50-day moving average (a key technical level that traders watch) for the first time since September 4th.

Here’s where the major indices ended the day:

  • The S&P finished with a 1.2% loss. Down 36 points, the S&P ended at 2,940.
  • The DOW ended lower by 1.3%. Dropping 344 points, the DOW closed at 26,573.
  • The NASDAQ was down 1.1%. With a 91 point loss, the NASDAQ finished at 7,908.

Crude Oil (CL) dropped for the 6th day in a row. With a 0.8% loss, CL ended at $53.66 a barrel.

President Trump shared his reasons for today’s weak manufacturing numbers (hint: it’s not because of the trade war and it starts with an “F”).

The President tweeted “As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong…that our manufacturers are being negatively affected. Fed Rate too high.” 

Online brokerages are battling it out with lower commissions – which is great for traders, but bad for brokerage stocks.

Last week Interactive Brokers (IBKR) announced a move to zero commissions.

And today Charles Schwab (SCHW) lost 9.7% after announcing that it will drop commissions on U.S. stocks, ETFs and options to zero from $4.95. The change in commissions will go into effect on October 7th. According to Schwab, commissions currently account for 7.0% of Schwab’s annual revenue.

TD Ameritrade (AMTD), one of Schwab’s biggest competitors, had its worst day in 20 years because of the news.

TD Ameritrade lost 25.8%. It’s expected that commissions account for almost 25% of TD Ameritrade’s revenue, which explains the bigger loss now that TD is pretty much forced to lower commissions to compete with their competitors. E-Trade (ETFC) was down 16.4% and Interactive Brokers (IBKR) was down 9.4% in response to Schwab’s commission cuts.

Here is the economic calendar for the week:

Real Time Economic Calendar provided by Investing.com.

This Stock Market Update was provided by Rockwell Trading Services LLC.


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