Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average ended sharply Tuesday after surprisingly weak U.S. manufacturing data.
  • Micron Technology (MU - Get Report) is Real Money's Stock of the Day. Jim Cramer, founder of TheStreet.com said the chipmaker "should be on your radar."
  • Charles Schwab (SCHW - Get Report) shares tumbled, pulling rival firms deeply into the red, after the retail stock broker said it would offer customers commission-free trading.

Wall Street Overview

Stocks finished in negative territory during a bruising day of trading on Tuesday as investors started the final quarter of the year retreating from the weakest U.S. manufacturing data in a decade.
 
The Dow Jones Industrial Average ended down 344 points, or 1.28%, to 26,573, the S&P 500 dropped 1.23%, and the Nasdaq slid 1.13%.

The Institute for Supply Management's manufacturing index fell to its lowest level since 2009, dropping to 47.8 in September from 49.1 in August and the lowest level since June 2009. Below 50 typically indicates contraction, and follows similar weak readings in Europe and China for September.

"The trade war is wreaking havoc, to the point where the incipient upturn in manufacturing in China is not transmitting, at all, to the U.S," said Ian Shepherdson, founder and chief economist of Pantheon Macroeconomics. "This means that if consumers' confidence seriously falters, the U.S. could tip into the first recession ever caused directly by the actions of the President rather than the action of tight monetary policy on an overstretched private sector."

Mike Loewengart, vice president of investment strategy at E*Trade, said that the index has essentially been on a downward trend since the beginning of the year, noting that "ongoing weakness in manufacturing is just one indicator exhibiting the real effects of the ongoing trade war."

"That said, investors should keep in mind that (Tuesday's) ISM read is above the levels that typically indicate a recession is on the horizon," he said. "Further, the U.S. is a consumer-driven economy. Manufacturing is a much smaller component of our GDP. And as consumer spending still shows signs of strength, there are fundamental reasons to remain optimistic. With jobs numbers slated for (Wednesday) and earnings season on deck, investors have a lot of news to digest this week."

The U.S. factory activity slide followed a warning from the World Trade Organization on global commerce earlier Tuesday, with the international body cutting its global merchandise trade growth forecast to 1.2% from 2.6% for 2019.

"The reason the street took the news in such a serious fashion is that this is the second month in a row the reading came in below 50, signaling the deepening recessionary state of manufacturing," said Nick Giacoumakis, founder and president, at New England Investment & Retirement Group. "Today's reading was the lowest since 2009. As we recall, the economy was in a deep recession at that time. Tomorrow's ISM service sector number will become increasingly important to see if there are any signs that the softness and erosion in the manufacturing sector is creeping its way into the service economy.

President Donald Trump weighed in about the dismal numbers on Twitter. Taking a break from blasting House Intelligence Committee Chairman Adam Schiff over the impeachment investigation, Trump trained his anger on Federal Reserve Chairman Jay Powell and the Fed.

"Fed Rate too high," Trump wrote. "They are their own worst enemies, they don't have a clue. Pathetic!"

As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don't have a clue. Pathetic!

— Donald J. Trump (@realDonaldTrump) October 1, 2019

Stocks had started the session on a positive note, riding on Monday's advance, when China said its top trade negotiator would lead next week's negotiations with the United States, and after a U.S. Treasury official said the Trump administration doesn't have plans to stop Chinese companies from listing on U.S. exchanges.

In addition, Reuters reported that Chinese firms bought up to 600,000 tons of U.S. soybeans on Monday for shipment from November to January.

Charles Schwab (SCHW - Get Report) shares fell 9.7% to $37.76, pulling rival firms deeply into the red, after the retail stock broker said it would offer customers commission-free trading. E*Trade (ETFC - Get Report)   fell 16.4%; TD Ameritrade (AMTD - Get Report)  dropped 25.8%; and Interactive Brokers Group (IBKR - Get Report)  fell 9.5%.

McDonald's (MCD - Get Report) shares fell 2.6% to $209.02 after analysts at JPMorgan warned that comparable third-quarter U.S. sales for the world's biggest restaurant company could fall short of Wall Street forecasts.

McDonald's was one of the Dow's biggest losers, coming in behind 3M (MMM - Get Report) , Cisco (CSCO - Get Report) , and Caterpillar (CAT - Get Report) .

Boeing (BA - Get Report) shares fell 1.5% to $374.94. Analysts at Jefferies raised their price target on the aerospace giant despite its current issues with the 737 MAX.

Shares of Apple (AAPL - Get Report) were up slightly to $224.59 after CEO Tim Cook told a German newspaper that sales of the tech giant's new iPhone 11 were off to a "strong start."

U.S. Steel (X - Get Report) climbed 3.3% to $11.93 after the company said it had reached an agreement to buy a minority stake in Big River Steel, with an option to take complete control over the next four years, in a deal that could ultimately be valued at more than $2 billion.

Micron Technology (MU - Get Report)  fell 1.3% to $42.30. Jim Cramer, founder of TheStreet.com, said it's "a momentum stock that stands for semis because it has both flash and DRAM, basic building blocks of all small electronics." Micron Technology is Real Money's Stock of the Day.

McCormick (MKC - Get Report) shares climbed 6.9% to $166.95 after the spice maker reported fiscal third-quarter adjusted earnings ahead of analysts' forecasts and raised its full-year earnings guidance.In energy news, oil prices started coming down in mid-day.

Oil prices started coming down following news that Saudi Aramco has restored full oil production and capacity to the levels they were at before attacks on its facilities on Sept. 14, Reuters reported.

Brent crude contracts were down 27 cents to $58.98 a barrel, while West Texas Intermediate contracts, which are more tightly linked to U.S. gas prices, were off 48 cents to $53.59 a barrel.


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