Shares of online brokers were up in early trading Thursday, one day after Ameritrade (Nasdaq: AMTD) announced earnings that were twice as good as what Wall Street expected. Then on Thursday, Charles Schwab (NYSE: SCH) reported a 110 percent increase in first-quarter profits, earning 34 cents a share, a penny before than expected.
But apparently this wasn’t quite good enough. Online broker stocks quickly began to tumble. Ameritrade, which had been as high as 188-3/8 during the day, closed down 11-3/8 to 136-5/8, and Charles Schwab fell 14-1/4 to 124. Also hit hard was E*Trade, which dropped 11-7/16 to 101-7/16 after being as high as 144-1/2.
What does this all mean? Mostly that many investors were buying on the rumor and selling on the news.
E*Trade is reporting its earnings next week. Who knows what will happen then.