Dow rose 566, advancers over decliners 4-1 & NAZ advanced 358. The MLP index was up 1+ to the 276s & the REIT index gained 2+ to the 407s. Junk bond funds edged higher & Treasuries had a little selling which drove yields higher. Oil added 1 to the 76s & gold moved up 20 to 2452.
Dow Jones Industrials
The number of Americans filing for unemployment benefits
rose less than expected last week, potentially easing some concerns
about the health of the labor market following the disappointing Jul
jobs report. Labor Dept data shows initial claims for last
fell by 17K to 233K, below the 240K estimate. However, that remains higher than the 2019 pre-pandemic
average of 218K claims. Continuing claims, filed by Americans
who are consecutively receiving unemployment benefits, hit 1.87M
for the latest week, up 6K from the previous week,
the highest level for continuing claims since Nov 2021. The report comes with traders on edge after a global market
sell-off, triggered by the worse-than-expected payroll data released
last week. The report showed the economy added just 114K workers last
month, while the unemployment rate jumped to 4.3%, the highest level
since Oct 2021. Rising unemployment triggered the
Sahm rule, an indicator that is used to provide an early recession
signal. The rule stipulates that a recession is likely when the 3-month moving average of the jobless rate is at least a ½-percentage point higher than the 12-month low. Over the past 3 months, the unemployment rate has averaged 4.13%,
which is 0.63 percentage points higher than the 3.5% rate in
Jul 2023. The Sahm rule has successfully predicted every recession
since 1970. Rising unemployment triggered the Sahm rule, an indicator that
is used to provide an early recession signal. The rule stipulates that a
recession is likely when the 3-month moving average of the jobless
rate is at least a ½-percentage point higher than the 12-month low.
Jobless claims come in less than expected amid worries of a looming recession
Under Armour (UA) sales are falling across its business, but the athletic apparel
retailer posted better fiscal first qtr results than feared as the company beat expectations on the top & bottom lines. In the 3 months ended Jun 30, UA reported a loss of 70¢ per share, compared with a profit of 2¢ per share a year earlier. Excluding 1-time
expenses, it reported a profit of $4M (1¢ per share). Sales dropped to $1.18B, down 10% from $1.32B a year earlier. In
late Jun, UA agreed to settle a years-old securities lawsuit
for $434M about 3 weeks before a trial was slated to begin. In 2017, UA was accused of defrauding shareholders about its revenue growth in a bid to meet forecasts. The athletic company is in the midst of a broad restructuring plan as it fights to regain relevance, reverse a sales slump & boost
profits. Earlier this year, UA said it would lay off an
unknown number of workers, cut back promotions & discounts &
streamline its assortment to be more competitive. The company said it was not admitting fault or
wrongdoing but had agreed to end the case – about 7 years after it
was filed – because of “the costs and risks inherent in
litigation.” UA said it would pay the settlement using cash from its revolving credit facility. The
company now expects to swing to a loss in fiscal 2025. It's forecasting
losses per share to be 53-56¢ & adjusted EPS to be 19-22¢. UA previously expected full-year earnings of 2-5¢ per
share & adjusted EPS of 18-21¢ per share. The stock was up 1.16 (19%).
Under Armour sales fall after retailer cuts discounts, promotions
Eli Lilly (LLY) reported 2nd-qtr earnings & revenue that blew past expectations & hiked its full-year revenue outlook by $3B as sales of its blockbuster diabetes drug Mounjaro & weight loss injection Zepbound spike. The
drugmaker now expects revenue for the year to come in at $45.4-46.6B, an increase of $3B at both ends of the
range. The company also raised its full-year adjusted EPS to
a $16.10-16.60, up from a previous guidance of $13.50-14.00. The guidance increase was primarily
driven by the strong performance of Mounjaro & Zepbound & comes in
part due to “improved clarity” into the company’s production expansions & planned launches of Mounjaro outside the US. The company said it it several supply related milestones during the qtr, without providing specific details. Demand
has far outstripped supply for incretin drugs such as Zepbound &
Mounjaro, which mimic hormones produced in the gut to suppress a
person’s appetite & regulate their blood sugar. That has forced LLY to invest heavily to boost manufacturing. But its supply woes may be starting to ease. On Fri, the Food & Drug Administration's drug database said all doses of Zepbound & Mounjaro are available in the US after extended shortages. Still,
the company cautioned that expected increases in demand may result in
period “supply tightness” for certain doses of its incretin drugs. “We
just see unbelievable demand, and we’re not even trying that hard to
promote this drug,” CEO David Ricks said. “What you’re seeing is just consumer organic demand here as we’ve
shipped more product, as we bring more supply online in the United
States.” The pharmaceutical giant booked EPS of
$3.28, for the 2nd qtr. That compares with EPS of $1.95 a share a year earlier. Excluding 1-time items associated with the value of intangible assets & other
adjustments, EPS was $3.92 for the 2nd
qtr of 2024. 2nd-qtr revenue was $11.3B, up 36% from the same period a year ago. Sales were largely driven by higher demand for Mounjaro &
Zepbound as production increases improved supply in the US. It is Zepbound's 2nd full qtr on the US market after winning approval from regulators in Nov. The
weekly injection raked in $1.24B in sales for the period, which
is well above the $922M that was expected. The stock surged 63+ (8%).
Eli Lilly blows past estimates, hikes guidance as Zepbound, Mounjaro sales soar
Investors are piling into risk investments (stocks) once again & not bothered by recession worries. However nervous investors took gold to new heights.
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