Markets drift lower as rally loses steam

Dow dropped 293, decliners over advancers better than 5-2 & NAZ was up 7.  The MLP index fell 1+ to 287 & the REIT index slid back 2+ to the 239s.  Junk bond funds slid lower & Treasuries were sold, raising yields.  Oil fell 1+ to the high 69s as optimism over China stimulus plan fades & gold gained 8 to 2685 (more on both below).

Dow Jones Industrials 

Novo Nordisk’s (NOVO) blockbuster diabetes drug Ozempic may decrease the risk of opioid overdoses in certain patients, demonstrating its potential as an alternative treatment for opioid use disorder, according to a new study.  The active ingredient in Ozempic, semaglutide, was associated with a “significantly lower” opioid overdose risk than other diabetes medications in people diagnosed with both Type 2 diabetes & opioid use disorder, said the paper published in JAMA Network Open.  The results suggest that Ozempic could offer potential as a tool for addressing the ongoing US opioid epidemic, which was declared a public health emergency in 2017.  There are currently 3 effective medications to prevent overdoses from opioid use disorder, but a new alternative is needed because some patients simply don’t use them, said lead study co-author Dr Rong Xu, a biomedical informatics professor at Case Western Reserve University.  In 2022, only about a qtr of patients with opioid use disorder received recommended medications for it, & many discontinued treatment within 6 months, according to the Centers for Disease Control & Prevention.  The National Center for Drug Abuse Statistics says opioids are a factor in around 72% of overdose deaths in the US.  The study results also add to mounting evidence that a highly popular class of diabetes & obesity treatments called GLP-1s may have several health benefits beyond regulating blood sugar & promoting weight loss.  NOVO, its rival Eli Lilly (LLY) & independent researchers have been racing to study those drugs' potential in patients with chronic conditions ranging from kidney disease & sleep apnea to addictive behaviors such as nicotine & alcohol use.  NOVO went up 1.44 & LLY rose 12¢.   

Novo Nordisk’s diabetes drug Ozempic may lower the risk of opioid overdoses, study says

Harley-Davidson (HOG) is recalling about 41K motorcycles over concerns that wiring inside the bikes could experience a short circuit & cause a loss of power.  The company said in a report filed with the National Highway Traffic Safety Administration (NHTSA) that the recalled 2024 FLHX, FLHXSE, FLTRX, FLTRXSE & FLTRXSTSE motorcycles could experience a short circuit if their voltage regulator output wire becomes exposed from rubbing against the crankcase.  "If a short to ground occurs, the 60-amp main fuse may open, resulting in a loss of propulsion, combined with a loss of all electrical power, without prior indication to the rider," the recall report said.  "The unexpected loss of propulsion combined with the loss of all electrical power while in motion, without the ability to restart, may increase the risk of the crash."  The recalled FLHX and FLTRX motorcycles were built between late Oct 2023 & this Jul.  Meanwhile, the production for others occurred between Nov 2023 & Jul.  Authorized Harley-Davidson dealers will fix the recalled motorcycles for free.  Addressing the issue "will include inspection of the voltage regulator output wire harness and installation of a secondary retention strap," according to the report.  "We are not aware of any crashes or injuries associated with this condition," Harley-Davidson said in the report.  The stock was off 28¢.

Harley-Davidson recalls 41K motorcycles over wiring issue that could cause loss of power

More Americans are looking for jobs & unemployment worries are at their highest level in a decade, according to a new survey released by the Federal Reserve Bank of New York.  According to the NY Fed, the average expected likelihood of becoming unemployed in the next 4 months reached 4.4% in Jul, the highest in the survey's 10-year history.  This compared to 3.9% a year ago.  The expected likelihood of moving to a new employer also increased, rising to 11.6% last month from the 10.6% seen in Jul 2023.  More respondents are also actively on the job hunt, with 28.4% saying they've been searching for a new job over the past 4 weeks, the highest level since 2014 & an increase from 19.4% in Jul 2023.  The survey, which also noted decreased satisfaction with wage compensation, non-wage benefits & promotion opportunities at respondents' current jobs, comes as the Federal Reserve weighs recent labor market weakness with the unemployment rate now at 4.3%.  Economists & strategists have warned any further deterioration of the labor market would likely have a negative spillover effect to markets & beyond.

Americans looking for jobs at highest rate

Gold held steady after hitting an all-time high on hopes of another large US rate cut as the spotlight shifted to Fed Chair Jerome Powell's comments & US inflation data due later this week.  Spot gold was steady at $2655 per ounce, after hitting an all-time high of $2670 earlier.  US gold futures gained 0.1% to $2679.  The Federal Reserve delivered a 50-bp cut at its last policy meeting & traders see a 58% chance of another ½-percentage-point cut next month.  Lower interest rates boost non-yielding gold's appeal.  Gold hit a fresh all-time high as markets ramped up bets for another jumbo-sized Fed rate cut in Nov.

Gold Scales Record Peak on Bets of Another Big Fed Rate Cut

West Texas Intermediate (WTI) closed with a loss, giving up some day-prior gains that came as China took steps to stimulate its economy while the 2nd Gulf of Mexico storm in 2 weeks cuts into supply & a report showed a larger than expected drop in US inventories.  WTI crude oil for Nov closed down $1.87 to settle at $69.69 per barrel, while Nov Brent crude, the global benchmark, was last seen down $1.66 to $73.51.  In its weekly survey, the Energy Information Administration reported US oil inventories fell by 4.5M barrels last week, more than the estimate for a drop of 1.1M barrels.  The drop in stocks came as Hurricane Francine earlier this month cut production from the Gulf of Mexico.  Another storm, dubbed Helene, rose to hurricane strength today ahead of landfall in northern Florida tomorrow, according to the National Hurricane Center.  Gulf producers have begun evacuating platforms ahead of Helene's arrival, again cutting into supply.  The Bureau of Safety and Environmental Enforcement, the US offshore regulator, reporting 511K barrels per day have so far been shut in, 29% of gulf output.

WTI Crude Closes Down 2.6% Despite China Stimulus, Falling U.S. Inventories and Supply Cuts

After markets hit all-time highs, investors are looking for new data as to the health of the economy & the chances of another jumbo rate cut.  Stock averages are at records highs, but need more evidence that the rally can continue.