Hi Scoopers,

There wasn’t any good news about the state of the economy on Tuesday. Therefore, the stock market continued its declining trend for one more day. Other than that, one recent IPO lost almost 50% of its value, and it seemed that Pizza was the only thing that stayed hot in the market.

More information is available in the “Economy,” “What’s Up?” and “What’s Down?” sections. Scroll down to read.

MARKETS

  • U.S. markets: All three indices continued their downward movement on Tuesday, and finished the day at least 1% lower than Monday. Scroll to the Economy section to learn more.
  • Cryptocurrency: The cryptocurrency market didn’t change direction either. For now, Bitcoin’s price continued to hover in the $8,000 range.

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ECONOMY

The inflation rate is lower than what the Fed had hoped.

What happened on Tuesday?

The market’s mood was dampened by several macro factors on Tuesday. As always, trade negotiations and political ups and downs in the White House were on the top of mind. However, one particular economic indicator was the primary reason for another red day.

What drove the market down?

On Tuesday, the Bureau of Labor Statistics announced the latest reading of Producer Price Index (PPI). This is an index that measures the changes in the selling prices received by domestic producers. September’s PPI was lower than expected, and that’s the primary reason why the stock market ended in the red on Tuesday.

Typically, we assume that a lower inflation rate is better for consumers. However, a small and manageable amount of inflation is one of the drivers of economic growth. The Fed makes sure that the inflation rate to grow at a predefined level. And, if it falls below the target level, it can be interpreted as an indicator of a slowing economy. That’s precisely what happened in September. We now need to wait and see whether the Fed uses this economic indicator to justify another interest rate cut, later this month.

WHAT’S UP

Pizza is still hot.

So, what happened?

Shares of Domino’s (Ticker: DPZ) were up almost 5% on Tuesday after the company announced a less than stellar quarterly earnings report. The company’s leadership cut its same-store sales forecast for the next three years. What’s bothering Domino’s is the widespread practice of underpricing to gain market share by competitors. The management believes that the quick-service industry is in flux. Competitors are willing to lose money to gain market share. The strange nature of such market conditions has forced the company’s leadership to reduce their forecast horizon. Understandably so, the stock price initially fell on Tuesday. However, Domino’s plans to buyback shares put investors at ease, and the stock finished the day higher than where it started it.

WHAT’S DOWN

Another IPO is losing steam.

So, what happened?

Shares of SmileDirectClub (Ticker: SDC) is now hovering at 50% of its all-time high of $21.10 per share, less than one month after its IPO. You may remember SmileDirectClub from its advertisement on busses and bus stations. Beautiful people, with perfectly straight teeth, smiling and inviting you to embrace the emerging trend of teledentistry. With SmileDirectClub you can straighten your teeth without needing a metal bracelet or visiting a dentist every few weeks.

The price decline is in contrast to the recent 10 almost perfect scores by financial analysts. A series of lawsuits by the American Dental Association, and overall concerns about the safety of patients who choose to straighten their teeth without direct supervision of a dentist are some of the looming factors dragging the stock price. With this recent price decline, SmileDirectClub is now officially a part of the 2019 lukewarm IPO market.

WATER COOLER

A win for disability rights.

What does it even mean?

The Supreme Court cleared the legal path for blind people to sue retailers and restaurant chains for not making their menu accessible to them.

Amidst all the craziness in the stock market, it’s refreshing to hear about some progress in human rights, albeit being a small thing such as making menus accessible to disabled citizens.

The story started three years ago with a blind man taking action against Domino’s. He won the legal case demanding the pizza-chain to make its website accessible to blind people. Domino’s and a couple of thousands of other retailers joined forces to block the ruling. However, this Monday, the Supreme Court refused to take the case, and as such clearing the legal path for the initial ruling to become applicable as it was intended. As always there is good and bad to all stories. This will mean higher costs for retailers and restaurant chains. But, may be restaurant chains and retailers can stop underpricing their services to gain market share, as we discussed in the “What’s up?” section, and use the money to service blind people.

Hoda Mehr

Hoda Mehr

Brought to you by Hoda Mehr, Editor at Trade Stocks, CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 8,000 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. Subscribe for free here: Stockcard.io