Weak report on US manufacturing knocks stock market lower

NEW YORK (AP) — A surprise contraction in U.S. manufacturing last month knocked the stock market lower Monday morning, erasing an early rally.

The report from the Institute for Supply Management heightened concerns that the U.S.-China trade war is slowing down economic growth. The feud has also been sapping business confidence and prompting companies to hold off on investing and hiring.

Bond prices jumped after the ISM report came out, sending yields lower, as investors sought out safe assets. The yield on the 10-year Treasury immediately dropped to 1.62% from 1.73%, a very large move.

Charles Schwab plunged after eliminating commissions for online trading, escalating a price war with other online brokerages. Rivals TD Ameritrade and ETrade Financial lost about a fifth of their value in heavy trading.

KEEPING SCORE: The S&P 500 index fell 0.5% as of 11 a.m. Eastern time. It was up 0.5% earlier. The Dow Jones Industrial Average fell 153 points, or 0.6%, to 26,766. The Nasdaq fell 0.3%. Small-company stocks held up better than the rest of the market. The Russell 2000 index fell 0.1%.

ANALYST VIEW: The ISM report showed that manufacturing contracted for the second straight month in September and hit the lowest level in more than a decade. It's the latest sign that President Donald Trump's trade wars are hitting the U.S. factory sector. Analysts had expected manufacturing to expand slightly.

"The disappointing data is only fanning long-standing fears of slowing global growth," said Alec Young, managing director of Global Markets Research at FTSE Russell.

CHUCKING COMMISSIONS: Charles Schwab plunged 10% after the brokerage and financial adviser said it is eliminating trading commissions on stocks, exchanged-trade funds and options. Rival discount brokers fell even more as investors anticipated another escalation in the fight to lower trading costs for investors. TD Ameritrade sank 21% and ETrade Financial dropped 16.8%. All three were moving in very heavy trading.

OVERSEAS: Stocks in Europe edged lower and Asian stocks were mixed, though Chinese markets were closed for the National Day holiday marking the 70th anniversary of the founding of the People's Republic.

Inflation in the 19 countries that use the euro weakened in September, slipping farther from the European Central Bank's goal in a possible sign of more economic weakness. Also, The World Trade Organization cut sharply its forecasts for trade growth this year and next. It expects global trade to weaken this year to the slowest pace since the Great Recession due to the U.S.-China trade war.

SPICY PROFIT: McCormick rose 5.6% after the spices and flavoring maker raised its 2019 profit forecast following a third quarter profit report that beat Wall Street expectations. The company reported sales growth from spices, herbs and other consumer products in the Americas and Asia Pacific regions.

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