Dow went down 68 near session lows, advancers over decliners 5-4 & NAZ gave back 188. The MLP index was off 1+ to the 278s & the REIT index added 4+ to the 392s. Junk bond funds were slightly higher & Treasuries remained essentially even. Oil fell 1+ to the 77s & gold rose again, up 13 to 2178 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Novo Nordisk (NOVO) CEO Lars Fruergaard Jørgensen said its experimental weight loss pill, amycretin, could eventually become a best-in-class treatment for obesity. The Danish drugmaker is racing to capitalize on the runaway success of its blockbuster weight loss drug Wegovy by developing a new generation of treatments for obesity, including more convenient & potentially cheaper pills. His
remarks came one day after NOVO impressed investors with
early-stage trial data on amycretin. Patients on the pill lost about
13.1% of their weight after 12 weeks, Jørgensen said. That surpasses the 6% weight loss seen in those who took
Wegovy after the same time period. It also adds to the growing
enthusiasm around the potential of weight loss pills. Along with convenience for patients, pills could help alleviate some
of the supply constraints plaguing weight loss injections. Wegovy, along
with similar drugs, has soared in demand & slipped into intermittent
shortages over the past year due to its ability to help patients shed
significant weight over time. “We believe in the future there’ll
be different segments of anti-obesity treatments, with different
patients having different preferences,” Jørgensen said. “Some will
prefer an injectable and we really believe that once we can take a pill,
it’s a very convenient offering.” But those pills won’t join the
market any time soon. A midstage trial on amycretin will begin in the 2nd ½ of this year, with results expected in early 2026, the
company said. The stock fell 2.46.
Novo Nordisk CEO says weight loss pill could become a best-in-class drug
Gap's (GPS) largest banner Old Navy returned to growth for the first time in more
than a year during its holiday qtr as the retailer delivered
earnings that came in well ahead expectations. Sales at Old Navy grew 6% to $2.29B & the overall gross margin surged 5.3 percentage points to 38.9% thanks
to fewer markdowns & lower input costs. The forecast called for a gross
margin of 36%. EPS for the 3-month period that ended Feb 3 was 49¢ compared with a loss of 75¢ per share a year earlier. Sales rose slightly to $4.3B, up 1% from $4.24B a year earlier. Like other
retailers, GPS benefited from a 53rd week during fiscal 2023 & without
it, sales would've been down during the qtr. The extra week
contributed about 4 percentage points of growth during the fiscal 4th qtr. Comparable sales during the
qtr were flat, compared to estimates of down 1.1%. In-store sales were up 4% while online sales decreased 2% & represented 40% of total revenue. During the qtr, GPS saw higher average selling prices across all
of its brands & expects to grow its gross margin by at least a ½ percentage point in fiscal 2024. “We were the authorities of
taking on-trend basics, expressing it in ways that drove cultural
conversations. At its best, we were a pop culture brand that did much
more than sell clothes and as you know, we all know, we lost our edge.
We devolved from a pop culture brand to a clothing retailer, and today
we’re moving again,” CEO Richard Dickson said. “We’re getting our vibe back.” The stock went up 1.03.
Gap holiday earnings blow past estimates, Old Navy returns to growth
Feb added 275K jobs, posting another consecutive month of solid job growth, according to the latest Employment Situation Summary from the Bureau of Labor Statistics (BLS). Job growth was short of Jan's original tally of 353K jobs but above the revised number, which showed job growth was just 229K. Dec & Jan combined were 167K lower than previously reported. Feb's job growth was seen across several industries, including health care, gov, food services & drinking places, social assistance, & transportation & warehousing. The unemployment rate increased by 0.2 percentage points from the previous month to 3.9%, pushing the number of unemployed people in the country up by 334K to 6.5M. According to the BLS, the unemployment rate has been 3.4-3.9% since Mar 2022. The average hourly earnings for private employees rose 4.3% in the last year & increased by 0.1% from the previous month. This means wages have been 4.3-4.5% for 7 straight months & workers continue to see real growth in their spending power, except in housing. The continued gain in wages also does not help push inflation closer to the Federal Reserve's 2% target & could delay the plan to dial back interest rates. "There have been several recent readings that have shown inflation to be hotter than expected," Dan North, Allianz Trade Americas senior economist, said. "If this employment report continues to show strong job growth and wage increases, the Fed may not cut until September. That indeed makes this a very critical report. It could be that classic good news equals bad news reports. Good news of a strong labor market brings the bad news of rate cuts that seem to get further away."
Wages grow 4.3% in February but still outpaced by rising home prices
Gold closed at another record high, climbing again following 5 days of gains after an unexpectedly robust US jobs report looks to delay a cut to interest rates, pushing the $ lower. Gold for Apr closed up $20 to $2185 per ounce. The price of the metal is at a record on a weaker $ & momentum buying, even after the US added a more than expected 275K jobs last month, potentially delaying interest-rate cuts that promise to be bullish for the metal. Gold achieving new highs on the back of little to no change in the backdrop or grander narrative for gold gives mixed feelings. On the one hand, the eventual rate cut narrative (set to come to fruition in Jun) remains as gold positive as ever while geopolitical risks are being underappreciated. The $ fell following the jobs report, making the metal more affordable for intl buyers & the ICE dollar index was last seen down 0.07 to 102.75. Treasury yields were mixed. The 2-year note was last seen paying 4.492%, down 3.0 basis points, while the yield on the 10-year note was up 0.4 basis points to 4.091%.
Gold Rises to Another Record as the Dollar Drops Following a Bigger than Expected Rise in US Employment
West Texas Intermediate (WTI) crude oil closed lower on robust supply, even as demand remains solid as the US added more new jobs than expected last month, showing its economy remains robust despite high interest rates. WTI crude for Apr closed down 92¢ to settle at $78.01 per barrel, while May Brent crude, the global benchmark, was last seen down 96¢ to $82.00. The drop comes as global supply remains adequate, even as OPEC+ this week agreed to extend 2.2M barrels per day of production cuts thru Jun, countering rising supply outside the cartel with production in the US near a record, while Guyana & Canada also add new output. After a relatively weak year for Canada's oil producers, output growth in 2024 could amount to a significant 300-500K/barrels per day, putting the nation in the running to be the largest source of global oil supply growth. Still, demand remains robust as data from China showed imports remain robust, while US inventories rose less than expected last week & gasoline demand remains high amid a robust economy. The US added 275K new jobs in Feb, well above the estimate for a rise of 198K, showing the US economy is still running hot despite high interest rates.
WTI Crude Oil Closes Lower Despite Robust Demand as the US Economy Continues to Run Hot
The stock market began trading strong. Enthusiasm faded later on uncertainty about interest rate cuts giving the Dow a finish in the red & down 365 for the week. It's interesting that earnings from retailers have been choppy while the economy is viewed strong by many traders. Meanwhile gold is having one impressive rally.
Dow Jones Industrials
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