Monday, August 17, 2009

Daily Wrapup For August 17th

There wasn't any hint of an August rally today. Following in the wake of the Asian averages, particularly the Shanghai, the three major American averages plummeted about 2% right after trading began. After that plunge, they continued to drift downwards until about 11:15 AM ET. A short relief rally pushed them up somewhat, and the resultant range held until about 3 PM ET. Then, the downward drift continued until the close. Interestingly, there were no end-of-day rallies or plummets today. The Dow closed down 2.00%, the S&P 500 dropped 2.43%, and the NASDAQ ended down 2.75%. Stocks in general weren't the only asset class that was clobbered: light sweet crude closed at $66.75 a barrel.

The lowest-quintile P/E cut-off also ramped down, from Friday's 11.63 to today's 11.39. The S&P dividend yield, which forms the yield cut-off, rose seven basis point to 2.72%. After ETFs and stocks with market cap of less than 500M were eliminated, as well as ones with greater than 10% yields, the Low P/E Bin was left with ninety-five stocks for a drop of seven from Friday. Here are the changes in the Bin, as dash-listed below:

- Honeywell International Inc.
- Snap-on Incorporated

- Altria Group, Inc.
- CenterPoint Energy, Inc.
- Enersis SA
- H&R Block, Inc.
- Merck & Co., Inc.
- PartnerRe Ltd.
- SCANA Corporation
- The Travelers Companies, Inc.
- WSP Holdings Limited

Both Arrivals saw their stocks plummet enough to bring them back into the Bin. Honeywell, a maker of control devices with uses in several industries, saw its stock drop 2.65% and its P/E drop to below the Bin's cut-off. Snap-On, a toolmaker, also got back because its P/E dropped to below the cut-off.

The Departures got out for mostly happy reasons. By coincidence, two electric utilities in the Departure list saw their stocks close unchanged in regular trading. As a result, both CenterPoint and SCANA saw the P/E cut-off drop below their own. The stock of Altria Group, the U.S. arm of Phillip Morris, dropped only slightly today; like the previous two stocks, the low P/E cut-off lowered below its own P/E. Enersis got out because its Stock-Screener-recorded yield shot up well above 10%: that could be the result of a special dividend. With the exception of a quickly-reversed opening plummet, H&R Block was up (slightly) all day. Its P/E rose above the lowered cut-off. Merck didn't rise, but it got out of the Bin for substantially the same reason. International general reinsurance provider PartnerRe's stock also declined only slightly: its yield dropped below the yield cut-off. So did regular insurance company The Travelers. The last Departure is, in a way, the saddest. WSP Holdings was a high flyer in early-mid June, but was hammered earlier this month due to an earnings miss. This company, a China-rooted maker of seamless oil-country tubular goods, was doubly hit by the Chinese market's plummet and the oil market's. It dropped 10.18%, shooting its market cap to well below the 500M cut-off.

Speaking of reversing fortunes, BHP Billiton hasn't been having the best of times lately. Its stock declined 5.02% as the bloom on the reflation story wilted in the metals market. The recent strength of the U.S dollar was the major factor. Its drop put the stock below $50, a level not seen since almost a month ago.

That's all for the today's Wrapup. Thanks for reading, and watch out for non-falling utilities.

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