Dow rallies on bad news, and here’s why…

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Stock Market Update Thursday, October 3rd, 2019

What a day!

Stocks made quite a comeback today after being down big in early trading.

The major indices were flat at the open but rallied ahead of today’s ISM Non-Manufacturing PMI report.

And after Tuesday’s disappointing manufacturing PMI data, today’s report took on a little more significance.

But when the report was released at 10am ET, things got ugly.

The non-manufacturing index dropped to 52.6 (vs. a 55.4 forecast). Although the number still shows expansion (readings above 50 indicate expansion), it was a drop from the previous month and the lowest reading in more than 3 years.

After the report, stocks were in a free-fall. At one point the S&P was down as much as 1.1%, on top of the 3.0% the index lost in the last two days.

But stocks made a comeback after traders turned their attention towards the Fed.

With the disappointing economic data this week, the probability of a Fed rate cut has increased. According to the CME Group’s FedWatch tool, the probability of an October rate cut has increased to 93.5%.

Here’s where the major indices ended the day:

  • The S&P finished with a 0.8% gain. Up 23 points, the S&P ended at 2,911.
  • The DOW ended higher by 0.5%. Adding 122 points, the DOW closed at 26,201.
  • The NASDAQ was up 1.1%. With an 87 point gain, the NASDAQ finished at 7,872.

Crude Oil (CL) dropped made a comeback after a push below $51, but still finished with a loss, which makes it the 8th day straight that oil has finished lower. With a 0.1% loss, CL ended at $52.59 a barrel.

Today E*Trade (ETFC) entered the broker wars by following in the footsteps of Interactive Brokers, Schwab, and TD Ameritrade with $0 commissions on stocks.

With commissions making up approximately 10% of E*Trade’s revenue, the stock was down on the news. But today’s reversal, and the fact that the stock has lost more than 18% since Schwab announced its move to $0 commissions, helped the stock end with a 1.3% gain.

In earnings news, Pepsi (PEP) beat expectations and finished with a 3.0% gain.

Tesla (TSLA) had its best quarter ever as far as deliveries go. The company delivered 97,000 vehicles in the 3rd quarter, but the number still fell short of estimates. Tesla finished the day with a 4.2% loss.

We’ve had a tough week as far as data and the economic calendar goes. 

Tomorrow all eyes will be on the September Jobs Report at 8:30am ET.

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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