The carnage continued today with little relief in sight. Although morning futures had indicated a slightly higher open, earnings and economy jitters kept the wall of worry slippery. It remains to be seen if the recent slippage is step one of the Earnings-Relief Two-Step, in which stocks rally because the market was discounting a return to doomsday before the quarterly earnings roll out. Closely allied to this dance is the Earnings Management Two-Step, which companies have been jiving to for years.
Along with the market in general, the cut-off for the lowest quintile P/E dropped; it's now 9.62. The dividend cut-off for the Low P/E Bin rose somewhat, to an even 3%. After also cutting out ETFs and stocks with market cap of less than 500M, eighty-eight stocks were left in the Bin: an increase of two. Today's changes in the Bin are dash-listed below:
- Allianz SE (ADR)
- Dover Corporation
- Polaris Industries Inc.
- Bank of Hawaii Corporation
All three of the Arrivals got there through P/E compression. Bank of Hawaii's P/E compressed too, but not by as much as the P/E cutoff slid. It got on the Departures list simply by falling more gently.
The latter two of the Arrivals suggest how much trouble the capital-goods and durable-goods sectors have been having. Caterpillar's been pounded over the last week and a half, and GE's had it bad for close to a month. Both are Dow stocks, and both are in the Low P/E Bin. Both tend to sell durable goods.
That's all for today's abbreviated Daily Wrapup. Thanks for reading, and may the start of earnings season treat you well. Or not that badly, at least.