Markets climb while gold remains near its recent record high

Dow gained 260 (below early highs), advancers over decliners about 5-2 & NAZ fell 192.  The MLP index advanced 4+ to the 286s & the REIT index rose 3+ to the 378s.  Junk bond funds hardly budged & Treasuries had limited buying which lowered yields a little.  Oil was up almost 1 to the 81s & gold jumped 16 to 2347 (more on both below).

Dow Jones Industrials 

Novo Nordisk (NOVO) will spend $4.1B to build a new manufacturing plant in Clayton, North Carolina, in a bid to boost the supply of its blockbuster weight loss drug Wegovy, diabetes treatment Ozempic & other injectable therapies.  Demand for Wegovy & Ozempic has outstripped supply over the last year, spurring intermittent shortages in the US & forcing the Danish drugmaker to invest heavily to increase its manufacturing footprint.  The company  plans to invest $6.8B in production this year, up from roughly $4B last year.  The new manufacturing facility will be responsible for filling & packaging syringes & injection pens for the drugs.  “This investment really gives us the opportunity to serve more patients,” Doug Langa, Novo Nordisk’s head of North American operations, said.  “Importantly, I think the other key message here is it’s further investment in the U.S., so I think we’re very proud of that.”  Construction of the 1.4M-square-foot facility has begun & is expected to be completed in 2027 - 2029.  The company said 1000 workers will staff the site, adding to the 2500 employees already working at its 3 existing manufacturing plants in North Carolina.  3 lower, starter doses of Wegovy are currently in shortage in the US due to high demand, according to a Food & Drug Administration database.  Patients start Wegovy with lower doses & gradually increase the amount every 4 weeks until they reach a target dosage.  Wegovy & Ozempic are part of a class of medications called GLP-1s that mimic hormones produced in the gut to suppress a person's appetite & regulate their blood sugar.  Around 35K US patients on average start Wegovy each week today, up from roughly 27K in May.  The stock fell 25¢.

Novo Nordisk to build $4.1 billion North Carolina facility to boost output of Wegovy, Ozempic

Ferrari's (RACE) all-electric model won’t be launched for over a year, but early tests indicate it has all the driving traits & emotion of a true Ferrari, according to CEO Benedetto Vigna.  “The final judge will be the client,”  Vigna said during the opening of its new E-Building in Maranello, Italy.  “More people have started to drive our electric Ferrari, and they have a good feeling. The driving traits are there.”  Vigna added the defining characteristic of a Ferrari is the emotional experience. Having driven the all-electric Ferrari himself.  “I had this kind of emotion.”  Ferrari's plan to build an electric model marks a bold & expensive bet for a luxury automaker famed for its roaring, powerful combustion engines.  Little is known about the electric model, which is not scheduled for launch until the 4th qtr of 2025.  Yet the notion of an electric Prancing Horse has already set off a vigorous debate in the auto community & among wealthy car collectors.  Much of the debate is focused on engine sound.  Ferrari powertrains are prized for their symphony of roars, rumbles, pops & high-pitched whines.  Electric motors are largely silent.  Vigna said Ferrari's power acoustics will always be “authentic,” meaning the company won't try to recreate the sound of a combustion engine through fake audio programs.  He hinted, however, that it could amplify or better showcase the natural sound of an electric motor.  “The electric engine is not silent,” he said.  “There is a way to let it play in a unique way.”  Vigna declined to give projections for the price or overall sales of the all-electric Ferrari.  The stock rose 7.05.

Ferrari CEO says all-electric model preserves the ‘emotion’ of the supercars

Federal Reserve Bank of San Francisco Pres Mary Daly warned the US labor market is nearing an inflection point, where further slowing could mean higher unemployment.  Daly, who votes on monetary policy this year, said restrained demand will likely be needed to return inflation to the central bank’s 2% target.  That may stress a labor market that while good, is no longer “frothy.”  “So far, the labor market has adjusted slowly & the unemployment rate has only edged up.  But we are getting nearer to a point where that benign outcome could be less likely,” Daly said.  “Future labor market slowing could translate into higher unemployment, as firms need to adjust not just vacancies but actual jobs,” she added.  “At this point, inflation is not the only risk we face.” The San Francisco Fed chief said the bumpiness of inflation data this year has not inspired confidence, though recent readings showing a step down in price growth have been more encouraging.  Still, Daly said it's hard to know if the economy is truly on track to price stability.  Her remarks followed comments last week from several Fed officials who emphasized the need for more evidence of cooling inflation before lowering interest rates.  Policymakers have held borrowing costs at a 2-decade high for nearly a year now & they appear in no rush to lower them.  Earlier this month Fed officials penciled in just 1 rate reduction for 2024, down from the 3 projected in Mar.  Daly urged policymakers to remain vigilant & open to various scenarios the economy could take.  “To be appropriate, policy has to be conditional,” she said.

Fed’s Daly Warns of Labor Market Risks, Nearing Inflection Point

Gold prices rose, helped by a pullback in the $, while investors looked forward to US inflation data due later this week that could offer more clarity on the Federal Reserve's monetary policy.  Spot gold was last up 0.5% to $2332 per ounce & US gold futures rose 0.6% to $2345.  The $ fell 0.5% against its rivals, making gold attractive for other currency holders.  Gold is in consolidation mode & there is active buying on dips.  Investors are looking for the trajectory of interest rates moving forward & the timing of those potential rate cuts.  Focus this week will on the US Personal Consumption Expenditures (PCE) data, the Fed's preferred measure of inflation, which is due on Fri.

Gold Gains on Dollar Retreat, Focus on U.S. Inflation Data

West Texas Intermediate (WTI) crude oil closed higher on solid demand & a falling $.  WTI crude for Aug closed up 90¢ to settle at $81.63 per barrel, while Aug Brent crude, the global benchmark, was last seen up 83¢ to $86.07.  Oil is benefiting from expectations summer demand is on the rise. with a rising call on US gasoline inventories & healthy aviation demand, while supply remains tight amid OPEC+ production cuts.  The underlying reason behind the price strength is the growing confidence that global oil inventories will inevitably plunge during the summer in the northern hemisphere.  Estimates greatly diverge, yet the view of declining stocks is becoming prevalent.  Prices are also benefiting from a weakening $ which was unable to hold at a 7-week high reached on Fri after data showed solid growth for the manufacturing & service sectors.  The ICE dollar index was last seen down 0.29 points to 105.51.

WTI Crude Oil Moves Higher on Summer Demand and a Lower Dollar

AI stocks, largely traded on NAZ, have lost some sex appeal in the last week or so.  Investors have switched their interest into traditional companies.  Thoughts about high interest rates persisting for a long period of time are troubling for investors.  Summer could be a challenging time for the stock market.