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Tickers in this Article: MKTX, CACC, VRTS, GS, BEN, NSM, FCNCA
The Nasdaq has climbed 1.9%, the S&P 500 has increased 1.8% and the Dow is trading up 1.7%, marking a bad morning for the market. The financial sector is the category of stocks containing firms that provide financial services to commercial and retail customers. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investments. Improved economic conditions usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a larger number of loans.

The Financial sector (XLF) is up 2.2%, outperforming the market overall. The biggest movers in the sector so far are:
CompanyMarket CapPercentage Change
MarketAxess Holdings (Nasdaq:MKTX)$1.27 billion-11.2%
Credit (Nasdaq:CACC)$2.44 billion-7.3%
Virtus Investment Partners (Nasdaq:VRTS)$650.1 million+3.1%
Goldman Sachs (NYSE:GS)$52.71 billion+2.6%
Franklin (NYSE:BEN)$24.88 billion+2.5%
Nationstar Mortgage Holdings (NYSE:NSM)$2.55 billion-2.3%
First Citizens BancShares (Nasdaq:FCNCA)$1.68 billion+2.1%
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Taking a 11.2% hit, MarketAxess Holdings (Nasdaq:MKTX) is currently trading at $30.19 per share. So far today, the company's volume is 471,882 shares. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. MKTX's P/E ratio of 25.8 is above the industry average of 16.86. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: Understanding The P/E Ratio

Credit (Nasdaq:CACC) is trading at $92.20 per share, down 7.3%. So far today, the company's volume is 60,584 shares, 3.9 times its current three-month average. If a stock price moves on high volume, this means that the change is a significant one. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. The price/book value ratio is one of the more common methods of determining whether a stock is fairly valued. The P/B ratio for CACC is 4.19, indicating that the stock is trading for more than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Virtus Investment Partners (Nasdaq:VRTS) has increased to a share price of $85.60, a 3.1% rise. So far today, 11,328 shares of the company's stock have changed hands. This is a sign that there will be less trading activity than there was yesterday. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. The P/S ratio for VRTS is 2.63, which is relatively high. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Goldman Sachs (NYSE:GS) is at $112.79 per share after an increase of 2.6%. So far today, the company's volume is 2.8 million shares, 0.8 times the average daily volume. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for GS is 16.0, below the industry average of 38.85. A low P/E ratio may indicate that the market expects relatively slower earnings growth. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Investment Valuation Ratios: Price/Earnings Ratio

Franklin (NYSE:BEN) has risen 2.5% to hit a current price of $119.99 per share. The company is currently trading a volume of 139,304 shares. The trading volume for a stock indicates the level of investor interest. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The price/earnings to growth (PEG) ratio can reveal value what price/earnings (P/E) ratios alone may not so that if a company has a high P/E ratio (an indication that its stock is overpriced) but its earnings are growing very quickly, the PEG ratio may reveal that the company is actually fairly valued, or perhaps even a bargain. BEN has a PEG ratio of 1.54, which is consistent with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

After a decline of 2.3%, Nationstar Mortgage Holdings (NYSE:NSM) has hit a share price of $27.92. The company's volume is currently 551,182 shares for the day, in keeping with the average volume over the past three months. Volume is used to evaluate how meaningful the price movement of a stock is. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. NSM's stock is trading for more than its book value with a P/B ratio of 3.93. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. P/B value ratios are particularly useful to value investors, distressed or "vulture" investors, or any other investors purchasing beaten-down securities but are less useful to investors focused on growth stocks, purchasing IPOs, or investing in technology or other "asset-lite" companies. SEE: How Buybacks Warps The Price-To-Book Ratio

First Citizens BancShares (Nasdaq:FCNCA) has moved up 2.1% and is currently trading at $167.40 per share. So far today, the company's volume is 8,438 shares. This is more trading activity than there was yesterday. A stock's volume conveys how excited investors are about it. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. Dividend yield measures the income that a stock will generate for an investor. FCNCA has a dividend yield of 0.7%, which is fairly low. A company with a low dividend yield may be a safer investment in the long run. A stock's dividend yield depends on the nature of a company's business, its posture in the marketplace (value or growth oriented), its earnings and cash flow, and its dividend policy. SEE: Due Diligence On Dividends

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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