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.
Buffett's annual letter
4 hours ago