Author: reuters

By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes inched higher on Tuesday as investors parsed big-ticket earnings and awaited commentary from policymakers for clues on the timing of the Federal Reserve’s first interest-rate cut.

Eli Lilly jumped 3.5% after forecasting 2024 profit above estimates, driven by demand for its blockbuster weight-loss drug Zepbound and diabetes medicine Mounjaro.

GE HealthCare Technologies gained 8.0% after the medtech firm posted better-than-expected fourth-quarter earnings.

The S&P 500 healthcare sector was up 0.6%, scaling a record high. The materials index gained 1.4%, as chemicals firm DuPont de Nemours jumped 6% after beating fourth-quarter profit estimates, announcing a new $1 billion share-repurchase program and hiking its dividend.

With around half of the S&P 500 companies having reported earnings, 80.4% have surpassed expectations, according to LSEG data last week. Overall S&P 500 earnings are now expected to have risen 7.8% in the fourth quarter from the year-ago quarter.

Investors are actively monitoring forecasts from businesses against a backdrop of high borrowing costs and persistent slowdown concerns.

“Companies are telling us they see growth in six months to a year out and it could be growth in earnings or in the top line. But it’s definitely growth, and it’s not the recession that people were looking for last year,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Certainly there have been winners and losers in certain categories, but overall, we’re getting an economy that’s growing.”

Wall Street started the week on a glum note in the previous session on the heels of a blistering rally in the S&P 500, which notched 13 weekly gains out of 14. The benchmark index was aided by largely positive corporate earnings and optimism that a rate cut might be imminent.

However, Fed officials, including Chair Jerome Powell, have actively talked down market expectations of a quick start to policy easing, a key theme in the central bank’s interest-rate decision last week. Strong labor market and economic activity data have also fed into rate-cut anxieties.

Remarks from the Fed’s policymakers through the day, including voting member Cleveland’s Loretta Mester, will be on investors’ watch list.

Traders are betting with a nearly 65% chance that at least a 25-basis-point rate cut could be delivered in May, with the odds standing at around 94% for the first cut in June, according to the CME FedWatch Tool.

At 9:53 a.m. ET, the Dow Jones Industrial Average was up 130.09 points, or 0.34%, at 38,510.21, the S&P 500 was up 9.50 points, or 0.19%, at 4,952.31, and the Nasdaq Composite was up 16.48 points, or 0.11%, at 15,614.16.

Palantir Technologies jumped 26.3% after the data analytics firm forecast annual profit above estimates, while FMC Corp tumbled 8.1% after forecasting downbeat first-quarter profit.

Gartner lost 2.9% after the research and advisory firm forecast annual results below estimates.

Advancing issues outnumbered decliners by a 3.23-to-1 ratio on the NYSE and by a 2.19-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and eight new lows, while the Nasdaq recorded 42 new highs and 57 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai)

By Patrick Wingrove and Bhanvi Satija

(Reuters) -Eli Lilly on Tuesday forecast 2024 profit above Wall Street estimates on soaring demand for its recently approved weight-loss drug, and said the treatment helped reduce symptoms of a common, difficult to treat fatty liver disease in a mid-stage trial.

The company said it expects 2024 revenue of $40.4 billion to $41.6 billion, and adjusted earnings of $12.20 to $12.70, putting the midpoint ahead of analysts’ estimates of $12.43 per share, according to LSEG data.  .

Sales of obesity drug Zepbound reached $175.8 million in the first few weeks of its launch, after it was approved by the U.S. Food and Drug Administration in November.

Shares of the Indianapolis-based drugmaker rose about 3% in premarket trading after gaining about 11% in January, making Lilly the eighth largest company in the U.S. by market capitalization and most valuable healthcare company.

“I guess, (I was) most surprised by the sales of Zepbound. I wouldn’t have expected near that much,” said Troy Harmon, Chief Investment Officer at Henssler Financial.

Lilly said it will expand manufacturing capacity, but expects demand for its diabetes and obesity drugs Mounjaro and Zepbound to outpace supply in 2024.

Explosive demand for Mounjaro, which had also been used off label for weight loss, and now Zepbound, has led to a buying spree of Lilly’s stock, propelling the drugmaker’s market value to over $600 billion.

The company and its main rival in the obesity market, Novo Nordisk, are both testing their treatments for other health benefits such as obstructive sleep apnea and chronic kidney disease, which could expand insurance coverage for the medicines.

Lilly said tirzepatide, the active ingredient in Zepbound and Mounjaro, met the main goal in a study for a type of fatty liver disease formerly known as NASH and now called metabolic dysfunction-associated steatohepatitis, or MASH.

Lilly said the drug helped up to 74% of patients achieve absence of the disease with no worsening of liver scarring at 52 weeks, compared to 13% of patients on placebo. A clinical trials database said patients in the study had stage 2 or 3 fibrosis.

Two analysts said they wanted to see more data on the benefit of tirzepatide on liver scarring. Lilly called the results “clinically meaningful” but did not provide further detail on whether they were statistically significant, they said.

Still, the data sent shares of other companies developing drugs for the fatty liver disease tumbling, including Madrigal Pharmaceuticals, Akero Therapeutics and 89Bio, which dropped between 19% and 22%.

The company has been investing in manufacturing facilities in the U.S. and Europe to ramp up supply of tirzepatide, announcing in November it would build its first plant in Germany for 2.3 billion euros ($2.47 billion).

Lilly reported sales of Mounjaro for the quarter rose to $2.21 billion from $279.2 million last year, easily outpacing expectations of $1.8 billion, according to BMO Capital Markets.

Fourth-quarter profit of $2.49 per share on an adjusted basis, beat Wall Street expectations by 27 cents.

(Reporting by Bhanvi Satija and Leroy Leo in Bengaluru and Patrick Wingrove in New York; Editing by Arun Koyyur and Bill Berkrot)

By Sinéad Carew and Johann M Cherian

(Reuters) -Wall Street’s main indexes closed lower on Monday after Federal Reserve Chair Jerome Powell pushed back firmly against speculation that rate cuts would be imminent, while investors assessed a mixed bag of U.S. earnings reports.

In an interview aired on Sunday, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, while Minneapolis Fed President Neel Kashkari wrote in an essay published on Monday that a resilient economy could defer rate cuts for some time.

Fresh data from the Institute for Supply Management showed the U.S. services sector’s growth picked up in January, with a measure of input prices rising to an 11-month high.

This added to doubts about rate cuts, already kindled by Friday’s data, which signaled the labor market’s resilience in the face of tight credit conditions.

Adding pressure was U.S. Treasuries, with 10-year yields up for second day straight and hitting their highest level since late January. [US/]

“Chairman Powell threw a wet blanket over trading today, taking any chance of a March rate cut off the table,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago.

But with all three of Wall Street’s major indexes paring losses as the session wore on, Ablin said investors are likely conflicted since positive economic data supports higher rates.

“Equity investors are torn between the higher rates and the stronger growth. They’re no longer sure that good is bad news,” he said. “Stronger growth on the economic front gives the Fed more flexibility to keep rates higher and know they’re not going to kill the economy but still have a potent weapon against inflation.”

And since Monday’s decline followed record high closing levels in the benchmark S&P 500 and the blue-chip Dow on Friday, Carol Schleif, chief investment officer at BMO family office in Minneapolis, Minnesota, saw it as a potential opportunity for investors who had been on the sidelines.

“The market had gotten way out over its skis, especially coming out of November, December,” Schleif said, adding that she was “not viewing this as the start of a major pullback.”

The Dow Jones Industrial Average fell 274.30 points, or 0.71% , to 38,380.12, the S&P 500 lost 15.80 points, or 0.32%, to 4,942.81 and the Nasdaq Composite lost 31.28 points, or 0.20%, to 15,597.68.

The S&P 500 materials sector was the biggest sector decliner, ending down 2.5%, dragged down by a 15.6% decline in Air Products after the industrial gas manufacturer forecast 2024 profit below estimates.

Of 11 major S&P sectors, only two gained ground with technology adding 0.6% and a 0.3% gain in healthcare.

Results were in from nearly half of the S&P 500 firms and fourth-quarter earnings estimates were improving sharply, with about 80% of the reports beating expectations, according to LSEG data on Friday.

“Mostly earnings season has been pretty mixed bag. It’s been more stock specific than industry specific,” said BMO’s Schleif.

Caterpillar closed up 2% after hitting a record high following its report of a higher quarterly profit, while Estee Lauder shares surged 12% as the MAC lipstick maker aims to cut about 3% to 5% of its workforce.

Boeing shares slipped 1.3% after it said a new quality glitch in some 737 MAX planes would delay some deliveries.

Tesla shares closed down 3.7% after touching its lowest level since May during the session. Piper Sandler slashed the stock’s price target.

Nvidia hit a fresh record high following a price-target raise by Goldman Sachs and closed up 4.8%.

Catalent shares soared 9.7% on Novo Nordisk parent Novo Holdings’ plans to buy the contract drugmaker in an $11.5-billion all-cash deal.

Declining issues outnumbered advancers by a 4.2-to-1 ratio on the NYSE. There were 142 new highs and 124 new lows on the NYSE.

On the Nasdaq 1,167 stocks rose and 3,136 fell as declining issues outnumbered advancers by about a 2.7-to-1 ratio.

The S&P 500 posted 29 new 52-week highs and 11 new lows while the Nasdaq recorded 86 new highs and 209 new lows.

On US exchanges 10.99 billion shares changed hands compared with the 11.58 billion moving average for the last 20 sessions.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai, Maju Samuel and Aurora Ellis)

By Leroy Leo and Patrick Wingrove

(Reuters) -AbbVie on Friday raised its 2027 forecast for sales of its immunology drugs Skyrizi and Rinvoq to $27 billion, up $6 billion from its previous prediction.

The Chicago-based drugmaker has been counting on revenues from its newer immunology medicines to help make up for declining sales of blockbuster arthritis drug Humira.

AbbVie said during an investor call its new prediction was based on growth seen for Skyrizi and Rinvoq, and that it expected the drugs to bring in $16 billion in sales this year.

The drugmaker predicted 2024 Skyrizi revenue of $10.5 billion and Rinvoq sales of $5.5 billion.

Shares of AbbVie rose 1.6% in early trading.

The new Skyrizi and Rinvoq forecast “will likely remove pricing concerns and help people model high-single-digit growth till end of the decade,” Wells Fargo analyst Mohit Bansal said.

Rinvoq sales of $1.26 billion beat expectations of $1.17 billion in the fourth quarter of 2023, while Skyrizi sales of $2.39 billion were in line with estimates.

Humira, once the world’s top-selling medicine, faced U.S. competition for the first time last year after nine close-copies of the drug, called biosimilars, entered the market.

The loss of exclusivity forced AbbVie to concede on net price to maintain market share. Humira U.S. sales last year plunged by 35% to $12.16 billion, the company said on Friday.

AbbVie said during its investor call that it expected Humira to make $9.6 billion in 2024, taking into account U.S. erosion of roughly 36%.

Sales of the drug fell 41% to $3.30 billion in the fourth quarter, but beat estimates of $3.28 billion. Humira sales also fell less than expected in the third quarter, buttressed by favorable positions on insurance drug coverage lists.

The company said during its investor call that Humira would lose some insurance coverage in the U.S. year over year, but would maintain broad coverage on pharmacy benefit manager (PBM) formularies in 2024.

PBMs act as middlemen for employers and health plans. They negotiate rebates and fees with drug manufacturers, and create lists, or formularies, of medications that are covered by insurance, and reimburse pharmacies for patients’ prescriptions.

For 2024, AbbVie forecast an adjusted profit in the range of $11.05 to $11.25 per share.

The average expectation for annual profit was $11.24, according to LSEG data, but some analysts said the consensus only partially accounted for the 32-cent hit from its acquisitions of drug developers ImmunoGen and Cerevel Therapeutics last year.

Botox brought in sales of $1.49 billion, ahead of combined estimates of $1.43 billion.

Botox has been facing increased competition from newer anti-wrinkle injections from Revance Therapeutics, Evolus and others.

AbbVie reported a quarterly adjusted profit of $2.79 per share, beating estimates by 2 cents.

(Reporting by Leroy Leo in Bengaluru and Patrick Wingrove in New York; Editing by Maju Samuel, Mark Potter, Nick Zieminski and David Ljunggren)