Wednesday, April 24, 2024

Markets wobble ahead of more tech earnings

Dow was off 42, decliners over advancers 3-2 & NAZ added 16.  The MLP index inched up 1+ to the 284s & the REIT index continued even in the 359s.  Junk bond funds crawled higher & Treasuries had more selling which increased Treasury yields.  Oil slid back below 83 & gold fell 8 to 2333 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Boeing (BA), a Dow stock, reported a better-than-expected qtr but continued to burn cash as it tries to stabilize production following a near-catastrophic door blowout on a 737 Max earlier this year.  BA burned thru $3.9B in the first qtr, beating a previous company forecast & analysts' expectations for a cash burn of as much as $4.5B for the 3-month period.  “Near term, yes, we are in a tough moment,” CEO Dave Calhoun, who announced in Mar that he would step down by year-end, said.  “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else. We are absolutely committed to doing everything we can to make certain our regulators, customers, employees, and the flying public are 100 percent confident in Boeing.”  Calhoun reiterated that the company's 737 Max production has dropped below 38 Max jets per month & the company said the rate would stay there for at least thru the first ½ of the year.  Deliveries have slowed sharply this qtr.  BA earlier this week told staff that it expects slower production increases & deliveries of its 787 Dreamliners because of parts shortages.  Its all-important commercial airplane unit revenue dropped 31% to $4.65B in the qtr compared with last year, with negative margins widening to 24.6% from 9.2%.  “We are using this period, as difficult as it is, to deliberately slow the system, stabilize the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term,” Calhoun said.  “As these efforts begin to take hold, we’re seeing early signs of more predictable, stable and efficient cycle times in our 737 factory, and expect this will continue to slowly improve.”  BA lost 56¢ per share in the first qtr, down from a 69¢ per-share loss a year earlier.  Excluding one-time items, including pension costs, the company lost $1.13 a share.  Revenue fell 8% to $16.5M, slightly ahead of estimates.  Calhoun stood by the company's goal of $10B in annual free cash flow in the 2025-2026 period, but said hitting that target would likely be delayed by about six months.  The stock was down 4.84.

Boeing reports better-than-feared quarter, says supply chain is stabilizing amid 737 Max crisis

Owning a home has long been considered the main pillar of the American dream, but the vast majority of aspiring homeowners in the US say they simply cannot afford it.  A new survey released by Bankrate found 78% of would-be homebuyers cited financial factors when asked what was holding them back from making a purchase.  The most common challenges cited by respondents were insufficient income (56%), followed by home prices being too high (47%) & the inability to afford down payments & closing costs (42%).  The findings come as a housing affordability crisis in the US continues to escalate with no end in sight.  As mortgage rates topped 7% last week for the first time this year, a separate report from Redfin found that the combination of steep mortgage rates & elevated home prices has pushed the median monthly housing payment to a new record of $2775, an 11% increase from the same time last year.  The high costs have pushed homeownership out of reach for many Americans & have left the housing market stalled for months as many would-be buyers & sellers remain on the sidelines waiting for affordability to improve.  Bankrate's latest survey found that nearly 7 in 10 Americans said they were willing to take at least one step necessary to find affordable housing.  44% of respondents said they could downsize their living space, while 34% said they would either move out of state or buy a fixer-upper.  "Owning a home is still the centerpiece of the American dream, but affordability is the main obstacle to making that a reality," said Bankrate Chief Financial Analyst Greg McBride.  "With the cumulative rise in home prices, rents and insurance costs, downsizing space may not yield a proportionate downsizing of costs."

Vast majority of aspiring homeowners say they cannot afford the American dream

Biogen (BIIB) first-qtr profit topped estimates as the company's cost-cutting efforts took hold & sales of its closely watched Alzheimer’s drug, Leqembi, came in higher than expected.  BIIB & Eisai's Leqembi became the first drug found to slow the progression of Alzheimer’s disease to win approval in the US in Jul.  The treatment’s launch has been sluggish, but uptake appeared to accelerate towards the end of the first qtr.  Leqembi brought in about $19M in sales for the qtr, up from the $10M the drug generated last year.  That blows past the $11M that had expected.  The number of patients on the therapy increased nearly 2.5 times since the end of 2023, according to BIIB.  The company added that the number of new patients who started Leqembi jumped in Mar, making up more than 20% of the cumulative patients now on the treatment.  BIOG did not provide a specific number of patients using Leqembi.  But in Feb, CEO Chris Viehbacher said that there were around 2000 patients currently on Leqembi.  BIIB & Eisai had previously aimed to treat 10K patients by Mar, but indicated in Feb that it would not meet the target.  BIIB is seeing an “awful lot of momentum” in the Leqembi rollout & expects qtr-over-qtr growth in the number of patients, but that increase may not be linear, Viehbacher said.  He noted that BIIB plans to expand its US marketing force by 30% to support Leqembi's launch.  BIIB sales were $2.29B for the qtr, down 7% from the same period a year ago.  EPS was $2.70, up from $2.67 for the same period a year ago.  Adjusting for one-time items, the company reported EPS of $3.67.  BIIB reiterated its full-year 2024 adjusted EPS forecast of $15-16.  Analysts had expected full-year EPS guidance of $15.49.  The company also reiterated its 2024 sales guidance of a low- to mid-single-digit percentage decline compared with last year.  BIIB stock shot up 8.81 (5%)

Biogen tops profit estimates as cost cuts take hold, Leqembi launch picks up

Gold prices fell for a 3rd session, partly because hedge funds reduced their holdings amid easing concerns of a major escalation of the Middle East crisis, while investors awaited key US economic data for interest-rate clues.  Spot gold fell 0.3% to $2315 per ounce, after having hit its lowest since Apr 5 in the previous session.  US gold futures fell 0.6% at $2328.  The $ regained some ground while benchmark Treasury yields also rose, making the $-priced bullion less attractive for other currency holders & as an investment option compared with debt.  Gold prices have dropped more than 3% since the start of this week.  However, strong demand from Asia, primarily China, along with the desire of central banks in emerging markets to diversify more in gold, is preventing prices from falling further.

Gold Extends Slide as Middle East Crisis Escalation Fears Ease

Oil prices fell 1% as worries over conflict in the Middle East eased & business activity in the world's largest oil consumer slowed, however, a fall in US crude oil inventories put a floor on those losses.  Brent crude futures were down 73¢ (0.8%) to $87.69 a barrel, while US West Texas Intermediate crude futures fell 84¢ (1.0%) to $82.52.  That reversed some of Brent's gains earlier in the week, buoyed by a weaker $.  It appears the fundamentals are leaning towards a little settling down in the Middle East.  US crude stockpiles fell by 6.4M barrels to 453.6M barrels last week the EIA said, compared with expectations for a 825K-barrel rise.

Oil Settles Lower as U.S. Business Activity Cools, Concerns Over Middle East Ease

Little was decided in choppy trading today.  Tech stock earnings reports shortly will get investor attention along with the GDP for Q1 & inflation data.  Dow is up 476 this week.

Dow Jones Industrials 

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