Dow dropped 23 with a little buying into the close, decliners ahead of advancers about 5-4 & NAZ retreated 87. The MLP index fell 1+ to the 271s & the REIT index gained 4 to the 379s. Junk bond funds were mixed & Treasuries rose which reduced yields. Oil was lower in the 78s & gold edged down 1 to 2042 (more on both below).
AMJ (Alerian MLP Index tracking fund)
The US economy grew at a solid clip in the 4th qtr amid strong consumer spending, the gov confirmed, but it appears to have lost some speed early in the new year. Gross domestic product increased at a 3.2% annualized rate last qtr, revised slightly down from the previously reported 3.3% pace, the Commerce Dept's Bureau of Economic Analysis said in its 2nd estimate of 4th-qtr GDP growth. The forecast had expected that GDP growth would be unrevised. The modest downward revision reflected a downgrade to private inventory investment. Inflation was fairly mild last qtr, though revised slightly up from previously reported estimates. The economy grew at a 4.9% pace in the Jul-Sep qtr. It expanded 2.5% in 2023, an acceleration from 1.9% in 2022 & is growing above what Federal Reserve officials regard as the non-inflationary growth rate of 1.8%. There are, however, signs that momentum has ebbed. Retail sales, housing starts, durable goods orders & production at factories declined in Jan. Some of the weakness in data last month has been blamed on freezing temperatures as well as difficulties adjusting the data for seasonal fluctuations at the start of the year. Economists are not forecasting a recession. Financial markets expect the Fed to start cutting interest rates in Jun, pushed back from May. Since Mar 2022, the central bank has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
US fourth-quarter economic growth revised slightly lower
Novavax (NVAX) vaccine maker 4th-qtr revenue & earnings that missed estimates & said it expects full-year 2024 sales to come in flat or lower than
last year. Still, NVAX narrowed its losses in the qtr from the same period a year ago, even as demand for the biotech company's Covid vaccine, its only marketable product, & other shots & treatments that combat the virus continue to plummet worldwide. The company posted a net loss of $1.44 per share
for the qtr. That compares with a net loss of
$2.28 per share in the year-earlier quarter. 4th-qtr sales of $291.3M were down from the $357.4M in the year-earlier period. CEO John Jacobs said that the company had some revenue move from
2023 into 2024 due to the timing of some advance purchase agreements for
doses of its Covid shot. But Jacobs also said that NVAX is “disappointed” with its performance
in the US Covid vaccine market last season. Several factors,
such as the later entry of its updated Covid shot last fall,
affected the company's ability to gain Covid vaccine market share in the
US, COO John Trizzino said.
But he said factors “outside of our control,” including a
smaller-than-expected Covid market size & an overwhelming number of
vaccinations that took place in retail pharmacies, led NVAX to
perform below expectations. It expects full-year 2024 revenue to come in at $800M - $1B. That forecast reflects an expected $500-$600M in revenue from advanced purchase agreements & $300-400M from commercial market product sales, royalties & other revenue from the company's “partner-related activity.” Analysts expect 2024 revenue of $969M. NVAX anticipates 1st-qtr revenue to come in at $100M,
which reflects the tail end of the current Covid vaccination season. The
company previously expected $300M in sales for the period. The stock fell 1.61 (27%).
Novavax stock falls as vaccine maker misses quarterly estimates, sees sluggish 2024
The Federal Aviation Administration (FAA)
announced that it is giving Boeing (BA), a Dow stock, 90 days to develop a
comprehensive action plan that will address "systemic quality-control
issues." FAA Administrator Mike Whitaker said the airplane manufacturer, still reeling from an incident involving a Max 9 jet that lost a door plug mid-flight earlier this year, "must commit to real and profound improvements." Whitaker
informed top BA officials, including CEO Dave Calhoun, of the
agency's demands during a safety discussion at FAA headquarters in DC. "Making
foundational change will require a sustained effort from BA's
leadership & we are going to hold them accountable every step of the
way, with mutually understood milestones and expectations," Whitaker
said. It has been exactly a week since BA replaced the head of its 737 Max program at the company's Renton, Washington, facility. Elizabeth
Lund, senior VP & general manager of Airplane Programs,
was appointed to a newly created role that will focus on quality control initiatives. The stock rose 5.67 (3%).
FAA gives Boeing 90 days to develop plan to address 'quality-control' issues
Gold closed with a small loss as the $ rose & treasury yields weakened after US 4th-qtr GDP growth was revised down to 3.2% from 3.3%. Gold for Apr closed down $1 to settle at $2042 per ounce. The Bureau of Economic Analysis revised its estimate for economic growth slightly downward while the consensus estimate expected the original 3.3% report would remain unchanged. The $ rose following the revision, making gold more expensive for intl buyers. The ICE dollar index was last seen up 0.13 points to 103.96. Treasury yields weakened, bullish for gold since it offers no interest. The 2-year note was last seen paying 4.666%, down 2.1 basis points, while the yield on the 10-year note was down 1.5 basis points to 4.287%.
Gold Edges Down as the Dollar Rises and Yields Dip as US Q4 GDP Growth Revised Downward
West Texas Intermediate (WTI) crude oil closed lower as a report said US oil inventories rose more than expected last week, though expectations OPEC+ will extend voluntary production cuts offered some support. WTI crude for Apr closed down 33¢ to settle at $78.54 per barrel, while Apr Brent crude, the global benchmark, was last seen down 17¢ to $83.46. In its weekly report, the Energy Information Administration said US oil inventories rose by 4.2-M barrels last week, above the estimate for a 2.7M barrel rise. Gasoline & distillate inventories declined by 2.8-M barrels & 0.5-M barrels, respectively. Yesterday a report said OPEC+ will likely extend voluntary production cuts into the 2nd qtr & possibly thought 2024, as the group continues to manage supply as production in the US, Canada & elsewhere outside the cartel rises.
WTI Crude Closes Lower as US Oil Inventories Rose More Than Expected Last Week
Stocks retreated, coming off a mixed close as caution prevailed ahead of a crucial inflation PCE report that will guide expectations for interest rate cuts. Also from the Atlanta Fed, the GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first qtr of 2024 is 3.2% on Feb 27, up from 2.9% on Feb 16.
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