Wednesday, August 19, 2009

Daily Wrapup For August 19th

It took a surprise drop in crude inventories to get the market up today. The three major averages started down about 1%, due to the resumed fall in the Chinese stock market last night. That opening gap didn't last, however: by 10 AM ET, all three averages were near the break-even point. Then, the news of the surprise inventory drop was disseminated. That was enough to get all three averages shooting well into positive territory. By noon ET, they were all up about 0.5% on the day. A drift upward ensued, which was staunched in mid-afternoon. An end-of-day rally helped the Dow to close with a 0.66% gain, the S&P to close up 0.69%, and the NASDAQ to close with a gain of 0.68%. Light sweet crude for September delivery was, of course, kicked up by the news: it closed at $72.42 per barrel for a gain of $3.23.

The lowest-quintile cut-off rose quite a bit today, from yesterday's 11.41 to today's 11.62. The S&P 500 dividend yield, which forms the yield cut-off, dropped one basis point to 2.67%. Once ETFs and stocks with less than 500M market cap were discarded, as well as stocks with greater than 10% yields, the Low P/E Bin was left with one hundred stocks: the same as yesterday. Here are the changes within the Bin, as dash-listed below:

- Enersis SA
- Plains All American Pipeline, LP

- Baytex Energy Trust
- Merck & Co., Inc.

The first Arrival, as it turns out, had gotten out through a glitch. Enersis, a Latin American electric utility, had a recorded yield above 10% two days ago. It's now recorded as 4.45%, putting the stock back in the Bin. Plains All American dropped slightly today; the rise in the lowest-quintile cut-off put its P/E back in Bin range.

Both Departures got out because of P/E expansion outstripping the cut-off rise; both were gainers today. Baytex Energy Trust, an oil and gas income trust with interests in Canada and the U.S, closed up 1.57% today. Major pharmaceutical company Merck gained 2.51%. Both stocks' gains lifted them out of the Bin.

Bin stock Banco Bilbao Vizcaya Argentaria made the business news today, for reportedly making the winning bid for the assets of ailing Texas bank Guaranty Financial Group. The deal was brokered by the FDIC, and marks the lastest inroad into Texas banking by the Spanish bank. Unlike the stock of an earlier acquirer, BB&T Corporation, Bilbao's stock did not rocket up as a result. It closed with a 0.87% gain, about in line with the three major averages.

That's all for today's Daily Wrapup. Thanks for reading, and remember that prudence works.

Disclosure: I'm holding Bilbao in the actively-managed Marketocracy mock fund I run.

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