🍨 Daily Scoop: Spiced Up!
By Wed, Oct 2, 2019
Hello Scoopers!
It wasn’t a good start to October, as the stock market ended the first day of the month in the red zone. Aside from the overall market, there was a big downfall in the financial services industry. Shares of most brokerage firms crashed because the industry took one step closer to make all investment trades commission-free. We have the privately-held startup Robinhood App to thank for our free trades, in case you were wondering whom you need to send your thank you cards. Finally, one stock managed to spice it up, despite the dampened mood of the overall market.
For those stories and more, scroll down to the “Economy,” “What’s up?” and “What’s down?” sections.
MARKETS
- U.S. markets: All three major indices agreed on the direction of the market and ended the day at least 1% lower than where they started. Scroll to the “Economy” section to learn more.
- Cryptocurrency: Bitcoin’s price had a few good hours on Monday, and ended Tuesday higher, but not enough to surpass the $8,500 mark.
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ECONOMY
Bad news in the U.S. manufacturing sector.
The recent reading of the U.S. Purchasing Managers’ Index is now at the lowest level in the last decade. Politicians, investors, and the media took it as a sign of lower-than-expected economic activity in the future and took the stock market down more than 1% on Tuesday.
The Purchasing Managers Index (PMI) is a survey of supply chain managers across 19 industries. It is conducted by the Institute of Supply Management (ISM). The index is a number between 0 and 100. A higher than 50 score is an indicator of growing economic activities, and an index lower than 50 is an indicator of shrinking economic activities.
Supply chain managers consider the demand they are seeing in the future and put orders for the supply they need accordingly. If they expect lower demand, they reduce their orders. And, that’s exactly what has happened this time. The September edition of the index came more than 2% lower than August at around 47. This can be an indicator of lower GDP in the coming months.
WHAT’S UP
One stock got spicy.
So, what happened?
Shares of spice-maker, McCormick (Ticker: MKC) got pretty spicy and ended the day more than 6.5% higher. This is a market-crusher stock, overperforming the market in the last 1, 3, 5, and 10 years. Earlier in 2019 though, investors got disappointed with just one lower-than-expected quarterly earnings report and sent the stock down quite significantly. However, the stock price is back up after the company announced its growing sales and earnings during its Q3 earnings report.
It makes you wonder why investors make decisions based on only one not-so-exciting quarter. We bet you that savvy investor picked up a few shares when the stock was down, earlier in the year. Did you?
WHAT’S DOWN
It’s all free.
So, what happened?
Shares of several brokerage firms crashed on Tuesday after Charles Schwab announced it’s now matching Robinhood App’s commission-free business model. One of the biggest losers of the day was the beloved TD Ameritrade (Ticker: AMTD). The stock finished Tuesday almost 28% lower.
Price-war is never good for anyone, except the consumers. Investors would save a few bucks per trade, but brokerage firms have to find other ways to make money, now that commission is out of the question. Free is never a good business model.
WATER COOLER
Something to laugh, or, cry?
So, what happened?
Tough day in the stock market, today. We thought you might want to read something refreshing? This interview with Professor Scott Galloway about WeWork and Adam Neumann (former WeWork’s CEO) is pretty entertaining since we all dogged the WeWork’s disaster. Or, potentially use it to cry a bit more, if you are an investor in WeWork — all you angel investor and Venture Capitalist Scoopers, raise your hands.
“You haven’t even begun to see the anger that will be unleashed on Adam Neumann,” — Scott Galloway, a professor of marketing at NYU Stern School of Business
Thank God everyone has WeWork’s IPO debacle and Adam to concentrate all their anger on.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
