Friday, September 4, 2009

Daily Wrapup For September 4th

The rally that started yesterday continued today, which lessened the averages' drop over the week. This day's favourite cause was the unemployment number, released before the bell, which came in at an above-expected 9.7%. The raw job losses shrunk, though, making the rise partially caused by previously uncounted workers returning to the workforce (including the discouraged part of it.) At first, the three major averages hesitated, as an opening rally faded. By 10 AM ET, though, the averages eased back into rally mode. At noon ET, they leaped up, especially the NASDAQ, and the rest of the afternoon saw a trading range develop. Thanks to that afternoon push, the Dow closed up 1.03%, the S&P 500 gained 1.31%, and the NASDAQ ended with a much larger 1.79% gain. Light sweet crude for October delivery barely budged, closing up 6 cents a barrel to reach $68.02.

The lowest-quntile P/E cut-off was also up today, from yesterday's 11.68 to 11.75. The yield cut-off, being the S&P dividend yield, fell four basis points to 2.60%. After ETFs and stocks with less than 500M market cap were eliminated, along with ones that yield more than 10%, the Low P/E Bin was left with one hundred and one stocks for a gain of two from yesterday. Here are the changes in the Bin, as dash-listed below:

- Exelon Corporation
- FPL Group, Inc.
- General Dynamics Corporation

- Williams Pipeline Partners LP

The first Arrival is the only new one. Exelon is an electric utility holding company whose subsidiaries supply power to the Chicago and Pittsburgh areas. It got in through P/E compression; the 0.45% drop in its stock was enough to bring its P/E down to the cut-off. The second one is another utility, centered in Florida. FPL Group stock fell also, also compressing its P/E to Bin range. The third Arrival, General Dynamics, did rise, but the yield cut-off dropped faster than its own today. That differential was enough to bring the company back in the Bin.

The one and only Departure got out through a late-day rise in its stock. Williams Pipeline, a holder of natural gas storage and transporation systems, saw its stock rise 4.30% today; most of that rise took place in the last hour. Given the volume, it's possible that it will return to the Bin soon.

The markets did well, but not all stocks did. Before the bell, H&R Block announced a loss that was larger than expected: -39 cents per share vs. an expected -37 cents. That disappointment had a predictable effect on the stock, especially since the disappointment largely came from worse-than-expected continuing-operations earnings. H&R stock started the trading day with a 2.23% loss. Some of the drop was erased around noon, but the early afternoon saw a resumption in the decline that climaxed at about 2:36 PM ET. Then, it recovered somewhat to close at $16.62 - one cent below its opening price.

That's all for today's Wrapup. Thanks for reading, and enjoy the long weekend.

Disclosure: I'm holding H&R Block in the actively-managed Marketocracy mock fund I run.

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