Major benchmarks gave up ground on Tuesday morning as market participants reacted negatively to downbeat news on the economic front. A key measure of manufacturing activity in the U.S. fell sharply during the month of September, and the reading suggested that conditions in the industrial economy could weaken in the near future. As of 11:20 a.m. EDT, the Dow Jones Industrial Average (^DJI -0.98%) was down 192 points to 26,725. The S&P 500 (^GSPC -0.46%) fell 17 points to 2,960, and the Nasdaq Composite (^IXIC -0.64%) lost 28 points to 7,971.
Among individual companies, Charles Schwab (SCHW -0.40%) got a lot of attention with a huge announcement that sent shockwaves throughout the online brokerage industry. Meanwhile, GoPro (GPRO -3.39%) got itself ready for the holiday season by releasing a new product line, and shareholders hope that the move will help the stock maintain its upward momentum over the past month.
Schwab goes to zero
Shares of Charles Schwab sank almost 10% Tuesday morning after the brokerage company announced that it would cut its commissions on many of its trades to zero. The move includes not only trading in individual stocks but also exchange-traded funds, and options contracts will keep only a per-contract fee, as the base commission amount will get eliminated.
Image source: Schwab.
Schwab timed the announcement with the release of its founder's latest book, citing the company's 45-year history of making investing easier and more affordable for ordinary investors. The founder himself noted that "eliminating commissions ensures my ultimate vision is realized -- making investing accessible to all." CEO Walt Bettinger echoed those sentiments, emphasizing that the move isn't a temporary promotion. "Price should never be a barrier to investing for anyone," Bettinger said.
Brokers have seen commission rates steadily move lower over the years as new competition has emerged. Most recently, zero-commission trading from mobile-tailored services has put pressure on Schwab and its peers, and Schwab's move is clearly a response geared to retain market share.
Yet the drop in Schwab's stock and those of its peers shows just how difficult the shift will be from a business standpoint. With interest rates so low that brokers' money management services don't generate the profits they used to, taking away commissions is another threat to long-term financial viability. It'll be interesting to see how quickly Schwab's rivals follow suit and what happens to earnings across the industry in the months ahead.
GoPro wants to be heroic for the holidays
Meanwhile, shares of GoPro picked up 5%. The action-camera specialist said that it would add new models to its long line of products, gearing itself up for the key holiday season.
In its latest release in its popular HERO line, GoPro expects the HERO 8 Black camera to debut at $399. The company hopes that HERO 8 will continue the positive momentum that last year's release of several HERO 7 camera models generated.
Yet GoPro also went a step further, introducing an innovative new camera. The GoPro MAX aims to offer a premium experience by including twin lenses on opposite sides of the camera. By doing so, GoPro could allow users to get 360-degree views, as well as give them more flexibility in using more traditional shots from multiple angles.
GoPro's stock has struggled throughout much of 2019, as last year's holiday-season strength gave way to concerns about the company's future. Shareholders are optimistic that the new cameras will bring GoPro back to technology's cutting edge in the action-camera business, and we'll know more as the holidays get closer.
