Day Traders Diary

10/1/19

The major averages started the fourth quarter to the downside as disappointing manufacturing data stoked worries over the U.S. economy. The Dow Jones Industrial Average finished down 343 points or 1.3% at 26,573 after rallying more than 100 points earlier in the day. The S&P 500 slid 1.2% close at 2,940. The Nasdaq Composite was down 1.1% at 7,908.

Tuesday marked the worst one-day performance for the Dow and S&P 500 since Aug. 23 when the two indexes fell more than 2%. The Institute for Supply Management said U.S. manufacturing activity contracted to its worst level since June 2009. The ISM report follows the release of weak manufacturing data from Europe. Shares of manufacturers such as Honeywell, 3M and Eaton rolled over on the data release, with each losing at least 2.8% lower.

President Donald Trump blamed the strong dollar and high interest rates for the weakness in U.S. manufacturing. In a tweet, he said the Federal Reserve and Chairman Jerome Powell were "pathetic" in their handling of the economy.

All 11 S&P 500 sectors finished lower, with the cyclical industrials (-2.4%), materials (-2.3%), energy (-2.3%), and financials (-2.1%) sectors bearing the brunt of the damage.

In corporate news, Charles Schwab fell 10% not far from a 52-week low after announcing it will eliminate commissions for stocks, ETFs, and options listed on U.S. or Canadian exchanges. Rivals, E-Trade fell 16% and TD Ameritrade fell 25.8%. Ouch.

The 2-yr yield declined six basis points to 1.56%, and the 10-yr yield declined three basis points to 1.64%. The 10-yr note yield hit 1.75% at its high after a weak 10-yr debt auction in Japan caused a sell-off in Japanese bonds that trickled over to sovereign debt in Europe and the U.S. The U.S. Dollar Index declined 0.3% to 99.13.