 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Wednesday's Headlines 1. U.S. Markets Sell-Off for Second Day in a Row 2. Hiring Slows for Private Companies 3. October's Tricky History 4. More Online Brokers Offer Free Trading 5. What Scares Millennial Investors Markets Closed
 Markets Today
Sentiment has shifted again, and the fear is palpable.
In just two days, the Dow and the S&P 500 have shed about 3% each as economic concerns have become a pervasive theme among investors. This, just as the fourth quarter had begun with both indexes near record highs.
Yesterday, the concern was over a manufacturing slowdown that surfaced in the Purchasing Managers Index (PMI), which showed the lowest monthly levels of manufacturing and export data since the Financial Crisis.
Today, the culprit was a slowdown in private payrolls which revealed that the pace of hiring is slowing as the labor market continues to tighten. ADP and Moody's Analytics said companies hired an additional 135,000 workers in September, a slowing from 157,000 hirings for August. August numbers were revised sharply lower.
A slowdown in manufacturing and hiring are nothing new and shouldn't have come as a surprise to anyone who watches the economy. This train has been due at the station for months. It's just that sentiment has shifted and investors, especially institutional investors who drive the market given their size, are looking for reasons to sell.
Technical analysts, like our resident expert, James Chen, will say that the S&P 500 has failed to stay above the 3,000 level where it has met resistance. Here's the S&P 500 over the past year.  James would be right about that, but we can't ignore the pessimism that has crept into the market over the past two weeks. Some of that is borne out of the unresolved trade war with China. Some of that is due to the stark reality that the U.S. economy is slowing and there doesn't seem to be a way to stop it. Interest rate cuts can be helpful in the short term, but if the economy were really healthy, the Fed would not have cut rates two weeks ago, or have plans to cut them again.
Insider Selling Up, Buybacks Down This may just be a coincidence or a seasonal trend, but corporate insiders have been selling stock at an impressive pace, just as corporate stock buybacks have been slowing down.
According to data from TrimTabs, corporate insiders sold $14.2 billion worth of their companies' stock last month through Sept. 26, according to an analysis of SEC filings. (When corporate executives buy or sell their companies stock, they need to file an S-4 form with the SEC). That's the highest of any September in the past 10 years.
Meanwhile, overall corporate demand for shares, in the form of stock buybacks and cash mergers and acquisitions, has dropped over the past few months. As you may remember, share buybacks hit record highs in 2018 and were on pace to top those highs this year. Those corporate buybacks played a big role in sending U.S. markets to record highs over the past two years.
Per TrimTabs, share repurchase volume was $145.9 billion in the third quarter, just a little over half the $281 billion worth of stock repurchased in the second quarter, and the lowest quarterly total since the third quarter of 2017.  We shouldn't jump to conclusions and assume that just because corporate insiders are selling, that the entire market is about to collapse. On the one hand, we are heading into the final quarter of the year and many of them may have share selling programs that kick in around this time of the year for tax and income purposes. On the other hand, no one knows their businesses better than they do, so if they are selling now... There is Something About October... The month of October has a tricky history in financial markets. It's the month that gave us spectacular crashes, like 1929, 1987, and 2008.
On the other hand, according to LPL Financial, over the past 20 years it has actually been the third best month of the year for stocks. Going back to 1950, it ranks as the seventh strongest month of the year.  (credits: LPL Financial)
What's past is not always prologue when it comes to financial markets, but it does give us some historical context to consider when we see volatility and steep sell-offs like we have over the past two days.
September was supposed to be very volatile, but ended up being a relatively sleepy month for U.S. and global markets. The S&P 500 didn't trade outside of a 1% range on any day last month. We've done that twice already, and it's only October 2.
E*TRADE Cuts U.S. Trading Commissions to Zero Et tu, E*TRADE?
Of course. The legacy online broker joined the fee cutting free-for-all in the online broker industry by announcing that, it too, would be eliminating trading commissions for stocks, ETFs and some options trades. It joins rivals TD Ameritrade, Schwab, and Interactive Brokers in the fee slashing wars. As our resident broker expert, Theresa Carey explains, for the six months ending June 30, 2019, commission revenue made up 17.7% of E*TRADE's net revenue, so this is a significant hit, though not as big as TD Ameritrade's (32%). Schwab's commission revenue made up just 6% of its net. The firm estimates the quarterly pro forma revenue impact of the commission changes to be approximately $75 million based on Q2 2019 operating results.
Read more: E*TRADE Drops Trading Commissions in Industry Fee Battle
Online brokers have been absolutely pummeled by investors over the past two days as their very business models have been thrown into questions.
Here's a small sample of the damage:
 What Scares Millennial Investors? Speaking of fear, we wanted to get a better understanding of the mindset of affluent millennial investors (those with household net incomes of $132,000), to see what made them fearful or confident about investing and financial planning.
We surveyed over 1300 millennials in this cohort over several months, and asked them hundreds of questions about their fears and desires. We focused on this generation, aged 23-39, because they experienced the most recent financial crisis and they grew up with technology in their hands.
As it turns out, the scars of the financial crisis are still very fresh, which has caused many of them to not invest or save sufficiently for retirement and other life stages.
It's a deep report, but it's important and it reveals a lot about the mindset of this critical generation that will control trillions of dollars in wealth over the next half century.
Give it a read: The Investopedia Affluent Millennial Investing Survey 
chart courtesy www.koyfin.com  In a day characterized by generally bad news for the market, homebuilder Lennar Corp was up 3.8% after announcing a third quarter EPS and revenue beat. Paychex rose 1.8% after similarly beating analyst expectations.  Biopharmaceutical company Nektar Therapeutics was the day's biggest loser, dropping 6.2%. Fashion company Capri Holdings and retailers Macy's and Kohl's fell 5.8%.  Word of the Day Sell-Off
There are several potential causes of a sell-off. In the stock market, common causes include the release of disappointing earnings reports, fears of increased competition, or the threat of technological disruption. Broader causes, such as macroeconomic concerns or natural disasters, can also trigger sell-offs.  (Source: English-Heritage.org)
Today in Market History October 2, 1925 Today in 1925, Scottish engineer John Logie Baird broadcast the first image on television, the head of a ventriloquist dummy. He conducted a public demonstration of the technology in January the next year, and by 1927 televisions were available for sale in stores.
https://www.english-heritage.org.uk/visit/blue-plaques/john-logie-baird-television/
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Wednesday, October 2, 2019
Fearful
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