Dow fell 96, advancers barely ahead of decliners & NAZ went up 65. The MLP index inched up in the 258s & the REIT index was off 1+ to 383. Junk bond funds remained about even & Treasuries continued to be sold which increased yields. Oil slid lower to the 74s & gold gained 7 to 2029 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, reported 4th-qtr earnings & revenue that narrowly edged expectations as sales in the company's pharmaceutical & medical devices businesses surged. JNJ also provided full-year guidance for 2024, forecasting sales of $87.8-$88.6B & adjusted EPS of $10.55-10.75. JNJ, whose financial results are considered a bellwether for the
broader health sector, booked $21.4B in total sales for the
final 3 months of 2023, up 7.3% from the same qtr in 2022. The
pharmaceutical giant reported EPS of $1.70 during the qtr versus $1.22 for the year-ago period. Excluding certain items, adjusted EPS was $2.29 for the 4th qtr of 2023. The results come 6 months after J&J completed its separation from its consumer health unit Kenvue (KVUE), the company's biggest shake-up in its nearly 140-year history. JNJ execs said earnings growth in H1 of the year will benefit from a 191M share reduction in Kenvue. The 3rd qtr will see a “partial benefit,” they added. Its medical devices business generated sales of $7.67B, up
13.3% from the 4th qtr of 2022. The forecast expected revenue
of $7.5B. Meanwhile, JNJ reported $13.7B in pharmaceutical sales, marking 4.2% year-over-year growth. JNJ has said it expects sales in its pharmaceutical unit to grow at a
compounded annual rate of 5-7% between 2025 & 2030. JNJ stock fell 2.74
Johnson & Johnson narrowly tops estimates as pharmaceutical, medtech sales jump
2023 was one of the most volatile years in history for the housing market. Last year saw the fewest existing home sales since the financial crisis in 2008. The Fed cutting rates throughout the year paired with a recovering economy will lead to this slow upturn in the housing market. Plus, the effects of the 2020-2021 price hikes & home demand are lessening, balancing out the market a bit, according to Fannie Mae. Single-family mortgage originations are expected to hit $1.98T in 2024 & rise even higher to $2.44T in 2025, a large increase from the $1.5T in originations in 2023. Housing affordability hit its lowest point in 2023, with just 15.5% of listings considered affordable for an average US household, according to Redfin. To give some context, in 2022, 20.7% of listings were affordable & before the pandemic, over 40% of homes were deemed affordable. Certain groups bore the brunt of this lack of affordable housing, Redfin reports. Black households saw a lower level of affordability, with just 6.9% of homes in 2023 designated affordable for the community. Latino households also struggled to find affordable home listings as 10.4% of homes on the market were affordable for them in 2023. For white households in 2023, 21.6% of homes were considered affordable & Asian households saw the highest affordability rate with over 27% of homes considered affordable. While home affordability isn't set to budge much this year, home listings are slowly increasing. Many potential sellers delayed listing their home in 2023 due to high mortgage interest rates & now that rates are declining, they're more likely to list. Fannie Mae's forecast for the last qtr of 2024 reports the potential for 4.5M units sold, up from 3.8M in Q4 2023. With limited listings on the market & inflated prices for those that are listed, new construction remains a popular choice for many buyers. Dec saw an increase in new construction homes, up both from Nov 2023 & Dec of 2022. Census Bureau information shows building permits for privately-owned houses reached 1495K, up 1.9% from Nov. The adjusted annual rate is also 6.1% higher than in Dec 2022.
Mortgage rates finally expected to dip below 6% in 2024, but affordability remains low
General Motors (GM) is redesigning its gas-powered Chevrolet Equinox crossover to look
more rugged than its predecessors in an attempt to move the vehicle
upmarket and attract new buyers. The 2025 Equinox, which GM revealed, will feature additional standard safety & convenience features. Brad
Franz, director of Chevy car & crossover marketing, said the changes
to the Equinox are meant to boost the appeal of the vehicle, which GM
introduced about 20 years ago. The compact crossover has grown to be
among GM's best-selling vehicles. “It’s critically important for
us to be introducing this product right now. We feel it’s going to be
just as important, if not more, than [before],” he said. “We still
expect it to be the #2 Chevy volume vehicle and, frankly, it plays in
the biggest segment in the industry at 22% [market share]. We don’t see
that declining.” Sales of the Equinox have been level the past 2 years at more than 212K units. The sales remain far below
pre-Covid pandemic levels of nearly 350K units in 2019. The 2025 model will have heated seats & a heated steering wheel
standard on all models, a first for the Equinox & many mainstream
brands. Some automakers have implemented or discussed including such
features in monthly or annual subscription fees rather than offering
them as standard or optional features. GM said about 90% of owners
surveyed wanted the features. Pricing for the 2024 Equinox ranges be $28,000 - $35,000, including mandatory destination fees. The vehicle will be produced at a plant in Mexico, where Franz says GM has room to increase production, if needed. The
2025 Equinox will continue to be powered by a 1.5 liter, 4-cylinder
turbocharged engine that produces up to 175 horsepower & 203
foot-pounds of torque. The vehicle is standard with front-wheel drive & available in all-wheel drive. The stock fell 8¢.
GM unveils 2025 Chevy Equinox with new rugged design, standard heated seats
Gold prices inched higher, as investors awaited a slew of US economic data this week for more clues to the Federal Reserve's timeline for interest rate cuts. Spot gold was up $4 to $2025 per ounce. Gold futures settled $4 higher at $2025. Focus this week will be on the US flash PMI report on tomorrow, 4th-qtr advance GDP estimates due on Thurs & personal consumption expenditures data on Fri. Fed officials last week said the central bank needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in the 3rd qtr. Markets are pricing in the central bank to hold rates unchanged at the end of the policy meeting on Jan 30-31 & have pared back the timing of the first interest rate cut, according to CME's FedWatch Tool. Lower interest rates decrease the opportunity cost of holding bullion. Meanwhile, the ECB meets on Thurs & is expected to hold monetary policy steady. On the physical front, India increased the import duty on gold & silver findings, used in making jewellery.
Gold edges up as traders eye cues on US rate cuts
Oil prices were largely flat today after Libya restarted production at a major oilfield & as output slowly recovered in North Dakota after a winter storm. The West Texas Intermediate contract for Mar lost 39¢ (0.5%) to settle at $74.37 a barrel & Brent contract for Mar fell 51¢ (0.6%) to settle at $79.55 a barrel. Libya restarted production at the Sharara oilfield yesterday, which has the capacity to produce 300K barrels per day. The oilfield was shut down for about 2 weeks due to protests. Oil output is also slowly recovering in North Dakota after a blast of Arctic weather hit the 3rd-largest crude producing state in the US. Oil production today was down by 250K to 300K barrels per day, compared to 700K bpd last Wed, according to the state pipeline authority.
Oil prices flat as Libya restarts production, North Dakota output slowly recovers
Earnings are coming in short of impressive. Since the early returns tends to be the better ones, the outlook going forward is not good. A report from the Atlanta Fed on GDP growth later this week is expected to show only meager GDP growth.Dow Jones Industrials
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