Wednesday, August 12, 2009

Daily Wrapup For August 12th

It's often held that the end of a Fed meeting bodes well for stocks. Despite the iffiness of that rule, it held up once again. The three major averages started off strong, leaping up to over 1% gains by 10 AM and basically holding there. News reports, like this one, attributed the early rise to good earnings news from Macy's and Toll Brothers. A leap-up later in the day, prior to a dip staring right after 2 PM ET, was attributed to the Fed's decision to leave the Fed funds rate unchanged. The NASDAQ briefly had a more than 2% gain, and the other two major averages were close to 2%. Near the end of regular trading, though, that late-afternoon rally was erased; the three major averages were left at about the same point they were at as of about 2:30 PM. The Dow was up 1.30%, the S&P 500 gained 1.15%, and the NASDAQ was up 1.47%. All told, it could be argued that the morning leap had discounted the Fed's decision and report all along. September light sweet crude closed today at $70.16.

The lowest quintile P/E cut-off also shot up, to 11.65 from yesterday's 11.41. In line with the S&P's rise, its yield sunk three basis points to 2.64%. After ETFs were thrown out, as well as stocks with more than 10% yields and/or market caps of less than 500M, the Low P/E Bin was left with one hundred and four stocks for a gain of five from yesterday. Here are today's changes in the Bin, as dash-listed below:

- Alliance Resource Partners, LP
- Altria Group, Inc.
- CenterPoint Energy, Inc.
- NTELOS Holdings Corp.
- SCANA Corporation


All but one of the Arrivals are companies that have been in the Bin before. The exception is the first one, Alliance Resource Partners. Alliance, which sells metallurgical and steam coal to steel companies and utilities, got in the Bin becaue its price dropped 2.20% today; that loss pushed its P/E below the upped Bin cut-off. Altria Group, the holding company for Phillip Morris USA, returned due to the P/E cut-off's rise. So did CenterPoint, a Texas utility holding company, and SCANA Corp, another electric utility; SCANA has its operations in South Carolina, but its natural gas arm does business in both Carolinas. The final Arrival, NTELOS, fell 2.88% in regular trading. Although this drop was reversed in after-hours trading, the regular day's drop put its P/E low enough for it to return to the Bin. NTELOS is a communication-services company that services Virginia and West Virginia.

A Bin stock got panned today by UBS, but the stock wasn't affected by the "sell" rating being maintained. As the first paragraph of the Globe and Mail write-up explains, "UBS expressed concern over Brookfield Properties' decision to buy distressed properties around the world and said it would keep its 'sell' rating on the property manager intact." The analyst responsible, Ross T. Nussbaum, also cited Brookfield's high debt-equity ratio as a concern. Despite that negative assessment, Brookfield climbed up today and ended with a gain of 1.85%.

That's all for today's Daily Wrapup. Thanks for reading, and may your holdings not depend too much on the Fed.

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