Author: Reuters

By Georgina McCartney and Arathy Somasekhar

HOUSTON (Reuters) -Oil prices rose for a third day on Wednesday, drawing support from a larger-than-expected fall in U.S. gasoline and distillate stocks a day after the U.S. government cut its estimates for output growth.

Brent crude futures rose 39 cents to $78.98 a barrel as of 1144 a.m. ET (1644 GMT), while U.S. West Texas Intermediate crude climbed 37 cents to $73.68.

U.S. gasoline stocks fell by 3.15 million barrels last week compared with analysts’ estimates for a build of 140,000 barrels, according to the U.S. Energy Information Administration (EIA). Distillate stocks fell 3.2 million barrels, compared with estimates for a 1 million barrel draw.

Crude stocks, however, posted a larger-than-expected build of 5.5 million barrels as production recovered after a cold snap, while U.S. refiners stepped up maintenance. Analysts had estimated a smaller build of 1.9 million barrels.

“The main contributor to the crude oil build was that refineries have had difficulty returning operations from the freezing cold weather over the last couple of weeks,” according to Andrew Lipow, president of Lipow Oil Associates.

Refinery utilization shrank 0.5% to 82.4%. On the U.S. Gulf Coast, the deep freeze knocked off 15% of refining capacity, pressuring utilization rates to their lowest level since September 2021, according to EIA data.

On the supply side, the EIA cut its 2024 outlook for domestic oil output growth on Tuesday, putting it far lower than last year’s increase and predicting it would not reach December 2023’s record levels until February 2025.

This all strengthened the case that the oil market will be balanced in 2024, analysts at Haitong Futures said in a note, adding that oil prices should remain in a $10 range around current levels.

U.S., Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.

Traders are following the situation in the Middle East, especially Iranian-backed Houthi rebels’ attacks on shipping in the Red Sea that have disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that carries nearly 12% of global trade.

In the longer term, the International Energy Agency (IEA) said on Wednesday that India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China.

That comes as struggling large economies, including China’s, dent confidence in the global oil demand outlook.

(Reporting by Paul Carsten in London and Arathy Somasekhar and Georgina McCartney in Houston and Muyu Xu; Editing by Paul, Christian Schmollinger, Louise Heavens, David Evans, Barbara Lewis and Nick Macfie)

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – New York Community Bancorp options drew increasingly bearish trading on Wednesday, as the bank’s shares extended their recent sell-off.

Put contracts that would guard against a plunge in the shares below $2 by mid-March were among the most actively traded, with about 8,000 of them changing hands as the stock fell about 13% to $3.65 on Wednesday morning. March puts at the $3 strike saw the heaviest volume, trading some 12,600 shares.

Rating agency Moody’s downgraded New York Community Bancorp’s long-term and some short-term issuer ratings to junk on Tuesday.

The bank’s shares have dropped more than 60% since January 30, after the lender disclosed huge provisions tied to likely sour loans from the commercial real estate segment, posted a quarterly loss and slashed its dividend payout.

“As we learned last year, banks that are facing a crisis can unravel quickly, so it’s not surprising that people would try to either hedge against it or speculate on it,” said Steve Sosnick, chief strategist at Interactive Brokers.

Overall, 131,000 New York Community Bancorp contracts traded in the first hour, about nine times the usual volume, according to Trade Alert data. Puts, typically bought to express a bearish or defensive view, outnumbered calls, generally a bullish play, 2.3-to-1.

Traders also picked up protection against a drop in the shares of the SPDR S&P Regional Banking ETF. The ETF’s shares have slipped about 13%, since January 30.

Still, bearish sentiment in the ETF’s options was not as extreme as in New York Community Bancorp’s contracts.

“While it’s clear that banks are continuing to underperform, and that we still see put buying in KRE and the like, it hasn’t yet developed into the type of situation we saw last March,” Sosnick said.

Meanwhile, short sellers targeting shares of a group of U.S. regional banks, including New York Community Bancorp were up about $1.37 billion in paper profits since January 30, according to data and analytics company Ortex. New York Community Bancorp alone accounted for about $174 million of those gains.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Nick Zieminski)

By Herbert Lash and Joice Alves

NEW YORK/LONDON (Reuters) – The dollar slid further on Wednesday as it consolidates a bounce in recent days from surprisingly strong U.S. economic data and pushback from Federal Reserve officials on market expectations of imminent interest rate cuts.

The dollar eased from a nearly three-month high against the euro on Tuesday even as market bets on a rate cut by the Fed in March rebounded. Treasury yields, often a factor in the dollar’s strength when they draw foreign investment, also were lower.

“The dollar’s rally is a bit overcooked, sort of in line with how I’m viewing U.S. yields,” said Brad Bechtel, global head of FX at Jefferies in New York.

“We’ve gone pretty far, pretty fast and we’re kind of bouncing up against some resistance levels.”

The dollar was down 0.14% to $1.0769 per euro, after retreating 0.1% on Tuesday, when it had earlier touched its strongest level since Nov. 14 at $1.0722.

The dollar index, a measure of the U.S. currency against six major peers, including the euro, slipped 0.08% to 104.06, following a 0.29% slide a day earlier. It had reached its highest since Nov. 14 at 104.60 on Monday.

“It’s really data that’s going to drive the next move. In the meantime, we’ll probably consolidate a little bit, pull back a little bit in the dollar, maybe rally a little bit in the euro and sterling,” Bechtel said.

Analysts pointed to technical factors for the dollar’s pullback, following a two-day rally of as much as 1.4% against the euro after unexpectedly strong U.S. jobs data, as well as more hawkish rhetoric from Federal Reserve Chair Jerome Powell, pummeled bets for a rate cut as soon as March.

U.S. Treasury yields gained some respite on Wednesday after falling from this week’s highs on solid demand at a sale of new three-year notes, removing some support for the dollar.

“Despite the ruling out of March rate cut hopes, the market is still showing some reluctance to go all in on the long U.S. dollar trade given the high conviction around rate cuts later in the year,” said Jane Foley, head of FX strategy at Rabobank.

Traders are currently pricing in a 23.5% chance of a rate cut in March, up from 14.5% on Monday, the CME Group’s FedWatch Tool shows. At the start of the year bets saw a 68.1% chance.

A sharper than expected fall in industrial production in the euro zone’s largest economy had no impact on the euro as “Germany’s industrial malaise is now a well-known story”, said Chris Turner, global head of Markets at ING.

The dollar edged 0.04% higher against the yen to 147.99, after sliding 0.49% on Tuesday. The currency pair tends to be extremely sensitive to moves in Treasury yields.

“Financial markets are in the process of recalibrating their expectations for Federal Reserve policy,” said James Kniveton, senior corporate forex dealer at Convera.

“If positive economic data, particularly on inflation, persists in the U.S., the tide could turn towards earlier rate cuts, potentially weakening the greenback further.”

Sterling rose 0.29% against the dollar to $1.2633 after higher house prices in Britain supported bets that the Bank of England (BoE) was not likely to cut interest rates any time soon.

(Reporting by Herbert Lash, additional reporting by Joice Alves in London and Kevin Buckland in Tokyo; Editing by Mark Potter, Emelia Sithole-Matarise and Deepa Babington)

By Sinéad Carew and Johann M Cherian

(Reuters) -The S&P 500 closed slightly higher on Tuesday, as investors scrutinized a mixed bag of earnings at big U.S. companies and digested comments from Federal Reserve policy makers for clues about its first planned interest-rate cut.

Minneapolis Fed President Neel Kashkari said the central bank is “not done yet” with inflation although he noted it had come down quickly with three-month and six-month inflation data “basically” at the Fed’s 2% goal.

Also, Cleveland Fed President Loretta Mester said that if the U.S. economy performs as she expects this could open the door to rate cuts. But Mester said she was not ready yet to suggest timing for easier policy due to inflation uncertainty.

On Sunday, Fed Chair Jerome Powell dashed any remaining hopes for a March rate cut. He had said the Fed can be “prudent” in deciding when to cut with a strong economy allowing time to build confidence that inflation is under control.

“The big macro news today is a couple of Fed governors confirming what Powell said over the weekend. It’s putting a little damper on markets today. It’s a little follow through from yesterday,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Stocks were down for much of the session before rising just ahead of the close.

The Dow Jones Industrial Average rose 141.24 points, or 0.37%, to 38,521.36. The S&P 500 climbed 11.42 points, or 0.23 %, to 4,954.23 and the Nasdaq Composite gained 11.32 points, or 0.07 %, to end at 15,609.00.

John Praveen, Managing Director & Co-CIO at Paleo Leon said the Fed should not wait too long to ease policy as troubles at regional Bank NY Community Bancorp spotlight weakness in the rate-sensitive commercial real estate sector.

Powell also referred to the sector on Sunday. On Tuesday, U.S. Treasury Secretary Janet Yellen said she was concerned about commercial real estate stresses on banks and property owners, yet she believes the situation is manageable with assistance from bank regulators.

Praveen saw the comments adding to investor jitters.

The KBW Regional Banking index finished down 1.4%, marking a 12.6% drop over six sessions. New York Community Bancorp shares ended down 22.2%. The lender has lost about 60% of its value since it reported a surprise quarterly loss last week citing write-offs for some real estate clients.

Airlines helped advance the Dow Jones Transport Average, which closed up 2.1%, with signs of strong air travel demand. Frontier Group Holdings’ rallied 20.8% after it surprised investors with a break-even financial report.

With over half of S&P 500 companies now having reported earnings, 81.2% surpassed expectations, according to LSEG data. Overall S&P 500 earnings are expected to have risen 8.1% in the fourth quarter from the year-ago quarter.

GE HealthCare Technologies finished up 11.6% after the medtech firm posted better-than-expected fourth-quarter earnings, driving the S&P 500 healthcare sector to an all-time high.

The materials index was the biggest gainer among the S&P 500’s 11 major sectors. It gained 1.7% with shares in chemicals firm DuPont de Nemours jumping 7.4% after it beat fourth-quarter profit estimates, announcing a $1 billion share-repurchase program and hiking its dividend.

Palantir Technologies shares soared 30.8% after forecasting upbeat annual profit.

However, Eli Lilly closed down 0.2% even after forecasting 2024 profit above estimates.

Chip stocks pressured the tech-heavy Nasdaq with the Philadelphia SE Semiconductor index ending down 1%. Rambus Inc led declines in the sector as its shares plunged 19.2% after its quarterly report.

Advancing issues outnumbered decliners by a 2.6-to-1 ratio on the NYSE. There were 190 new highs and 64 new lows on the NYSE.

On the Nasdaq 2,721 issues advanced and 1,476 declined as Advancing issues outnumbered decliners by a 1.8-to-1 ratio on the Nasdaq. The S&P 500 posted 27 new 52-week highs and 8 new lows while the Nasdaq recorded 110 new highs and 122 new lows.

On U.S. exchanges 11.21 billion shares changed hands compared with the 11.54 billion average for the last 20 sessions.

(Reporting by Sinéad Carew in New York, Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai and David Gregorio)

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

All eyes – not least those of policymakers in Beijing – will laser in on Chinese stocks on Wednesday to see if they can continue their surge higher on the latest wave of expectations that authorities will take further steps to support markets.

China’s big two indexes jumped more than 3% on Tuesday for their biggest gains in almost two years, although it should be remembered that only last week had sunk to five-year lows.

Still, the bounce suggests that the overwhelming gloomy sentiment towards China, even if you think it is justified on a longer term fundamental basis, is probably over-cooked in the short term.

Bloomberg News had reported President Xi Jinping will discuss the stock market with financial regulators. Regulators also announced further curbs on short selling and state investors said they were expanding their stockbuying plans.

Of course, those of a more bearish disposition will view any spike higher as a better level to sell. These are mostly short-term fixes to stop the asset price rot, and will do little to address the country’s deeper-rooted economic problems.

China’s rally propelled the MSCI Asia & Pacific ex-Japan index to a 1.5% gain on Tuesday, its best day this year. The retreat in U.S. bond yields and the dollar could also provide further impetus for risk assets in the region on Wednesday.

The economic calendar on Wednesday is packed with potential market-moving data in several countries, while the Bank of Thailand delivers its latest policy decision and guidance.

Governor Sethaput Suthiwartnarueput’s press conference could be particularly interesting should he respond to Prime Minister Srettha Thavisin’s latest call on Tuesday for rates to be cut to revive economic growth.

Thavisin, who is also the finance minister, has been at loggerheads with the central bank over the direction of monetary policy, arguing the economy needed support and warning that the country risks facing deflation.

All 27 economists in a Reuters poll expect the BOT to keep its benchmark one-day repurchase rate unchanged at 2.50%, and 18 of 25 respondents predict no change this year. Rates markets pricing points to 40 basis points of cuts by year-end.

Foreign exchange reserves rarely have an immediate impact on financial markets, but many investors will be paying close attention to the latest snapshot of China’s on Tuesday.

China’s $3.238 trillion stash of FX reserves, the world’s largest, are the highest in a year. The share of that held in U.S. Treasuries, however, is falling – it is now less than 3%, down from a record 14% in 2011.

These calculations are based on China’s official reserves. Some analysts reckon the true total could be closer to $4 trillion once the holdings of state banks and off-shore entities are taken into account.

Here are key developments that could provide more direction to markets on Wednesday:

– Thailand interest rate decision

– China FX reserves (January)

– New Zealand unemployment (Q4)

(By Jamie McGeever; Editing by Bill Berkrot)

By Sinéad Carew and Johann M Cherian

(Reuters) -The S&P 500 closed slightly higher on Tuesday, as investors scrutinized a mixed bag of earnings at big U.S. companies and digested comments from Federal Reserve policy makers for clues about its first planned interest-rate cut.

Minneapolis Fed President Neel Kashkari said the central bank is “not done yet” with inflation although he noted it had come down quickly with three-month and six-month inflation data “basically” at the Fed’s 2% goal.

Also, Cleveland Fed President Loretta Mester said that if the U.S. economy performs as she expects this could open the door to rate cuts. But Mester said she was not ready yet to suggest timing for easier policy due to inflation uncertainty.

On Sunday, Fed Chair Jerome Powell dashed any remaining hopes for a March rate cut. He had said the Fed can be “prudent” in deciding when to cut with a strong economy allowing time to build confidence that inflation is under control.

“The big macro news today is a couple of Fed governors confirming what Powell said over the weekend. It’s putting a little damper on markets today. It’s a little follow through from yesterday,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Stocks were down for much of the session before rising just ahead of the close.

The Dow Jones Industrial Average rose 141.24 points, or 0.37%, to 38,521.36. The S&P 500 climbed 11.42 points, or 0.23 %, to 4,954.23 and the Nasdaq Composite gained 11.32 points, or 0.07 %, to end at 15,609.00.

John Praveen, Managing Director & Co-CIO at Paleo Leon said the Fed should not wait too long to ease policy as troubles at regional Bank NY Community Bancorp spotlight weakness in the rate-sensitive commercial real estate sector.

Powell also referred to the sector on Sunday. On Tuesday, U.S. Treasury Secretary Janet Yellen said she was concerned about commercial real estate stresses on banks and property owners, yet she believes the situation is manageable with assistance from bank regulators.

Praveen saw the comments adding to investor jitters.

The KBW Regional Banking index finished down 1.4%, marking a 12.6% drop over six sessions. New York Community Bancorp shares ended down 22.2%. The lender has lost about 60% of its value since it reported a surprise quarterly loss last week citing write-offs for some real estate clients.

Airlines helped advance the Dow Jones Transport Average, which closed up 2.1%, with signs of strong air travel demand. Frontier Group Holdings’ rallied 20.8% after it surprised investors with a break-even financial report.

With over half of S&P 500 companies now having reported earnings, 81.2% surpassed expectations, according to LSEG data. Overall S&P 500 earnings are expected to have risen 8.1% in the fourth quarter from the year-ago quarter.

GE HealthCare Technologies finished up 11.6% after the medtech firm posted better-than-expected fourth-quarter earnings, driving the S&P 500 healthcare sector to an all-time high.

The materials index was the biggest gainer among the S&P 500’s 11 major sectors. It gained 1.7% with shares in chemicals firm DuPont de Nemours jumping 7.4% after it beat fourth-quarter profit estimates, announcing a $1 billion share-repurchase program and hiking its dividend.

Palantir Technologies shares soared 30.8% after forecasting upbeat annual profit.

However, Eli Lilly closed down 0.2% even after forecasting 2024 profit above estimates.

Chip stocks pressured the tech-heavy Nasdaq with the Philadelphia SE Semiconductor index ending down 1%. Rambus Inc led declines in the sector as its shares plunged 19.2% after its quarterly report.

Advancing issues outnumbered decliners by a 2.6-to-1 ratio on the NYSE. There were 190 new highs and 64 new lows on the NYSE.

On the Nasdaq 2,721 issues advanced and 1,476 declined as Advancing issues outnumbered decliners by a 1.8-to-1 ratio on the Nasdaq. The S&P 500 posted 27 new 52-week highs and 8 new lows while the Nasdaq recorded 110 new highs and 122 new lows.

On U.S. exchanges 11.21 billion shares changed hands compared with the 11.54 billion average for the last 20 sessions.

(Reporting by Sinéad Carew in New York, Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai and David Gregorio)

By Erwin Seba

HOUSTON (Reuters) -Brent and U.S. crude futures climbed over $1 a barrel on Tuesday after the U.S. Energy Department said crude oil production would not grow as fast as previously forecast.

Both then fell after remarks by a U.S. Federal Reserve official pointed to a later start for interest rate cuts.

Brent crude futures were up 41 cents, or 0.4%, to $78.39 a barrel by 11:44 a.m. CST while U.S. West Texas Intermediate crude futures rose 42 cents, or 0.58%, to $73.20. Both contracts had gained over 1% before sliding on Tuesday.

In its Short-Term Energy Outlook, the Energy Department said U.S. crude oil production will rise by 170,000 bpd this year; down from the previous forecasted rise of 290,000 bpd.

Remarks by Loretta Mester, president of the Federal Reserve Bank of Cleveland, quickly followed the Energy Department release.

Mester said interest rate cuts, widely expected in the late spring, were contingent on continuing declines in inflation before being implemented later in the year.

Traders began the day anticipating the Energy Department announcement, Mester’s remarks and the results of U.S. Secretary of State Anthony Blinken trip through the Middle East to end the Gaza War.

Blinken said on Tuesday morning that Hamas had replied to an Israeli proposal for a cease-fire that would be examined in the coming hours.

“The signs of de-escalation in the Middle-Eastern crisis are missing and continue to extend some support to ailing oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“We were waiting for what the Federal Reserve would say,” said Phil Flynn, analyst at Price Futures Group. Mr. Blinken is overseas. A lot of people don’t think he’s going to be able to land a deal.”

Inventory data due to be released later on Tuesday and on Wednesday is expected to show continued strong inventories for gasoline and diesel, Flynn said. But going forward, those inventories are expected to tighten, he added.

U.S. crude stockpiles data is due later on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.

Refiners are performing overhauls on plants across the country and an outage last week of the BP refinery in Whiting, Indiana, will limit production.

At the same time, the United States continued its campaign against Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes.

The U.S. strikes “do not point to an easing of tensions”, Commerzbank analysts Thu Lan Nguyen and Carsten Fritsch said in a note.

Yet souring demand expectations limited oil’s gains.

CMC Markets analyst Leon Li also said it would be difficult to return to previous highs, given the run of strong economic indicators from the U.S. was likely to lose steam.

“Layoffs are still increasing. This means that in the long term the (oil) demand will decline,” Li said.

(Reporting by Paul Carsten in London and Stephanie Kelly and Trixie YapEditing by Jason Neely, David Goodman, David Ljunggren and David Evans)

By Herbert Lash and Stefano Rebaudo

NEW YORK (Reuters) -The dollar slid against major currencies on Tuesday, a day after it rose to its highest level in almost three months, as strong economic data and a hawkish stance on interest rates by Federal Reserve officials bolster the U.S. currency.

Robust U.S. economic data, including a blowout unemployment report on Friday, and recent remarks from Fed Chair Jerome Powell have quashed speculation about early and steep rate cuts by the U.S. central bank that the market had widely anticipated.

Cleveland Fed President Loretta Mester said on Tuesday that if the U.S. economy performs as she expects, it could open the door to rate cuts. But Mester said she was not ready to provide timing for easier policy amid ongoing inflation uncertainty.

Other central bankers agreed. The European Central Bank doesn’t need to rush cutting rates, policymaker Boris Vujcic told Reuters, arguing it will be better for ECB credibility to be sure that inflation is decisively under control.

The dominant storyline for FX traders is a return to the U.S. economic exceptionalism trade from the third quarter of 2023, said Matthew Weller, global head of research at FOREX.com.

“Now traders are wondering if instead of whether we’ll get a soft landing or recession, whether we could have no landing or re-acceleration this year,” he said. “To me it is a lot about the U.S. dollar, the Fed and the economic data that we’re seeing out of the U.S.”

Traders are currently pricing in a 19.5% chance of a cut in March, the CME Group’s FedWatch Tool shows, compared with a 68.1% chance at the start of the year.

They are also now pricing in around 117 basis points (bps) of cuts by the end of 2024, compared with around 150 bps anticipated in early January.

The dollar index, which measures the U.S. currency against six others, fell 0.22% to 104.22, having touched 104.60 on Monday, its highest since Nov. 14.

Key to understanding the dollar’s strength are Fed policy decisions versus those of other central banks, and how high rates stay, as higher yields can bolster a currency.

“The real debate is not if the Fed cuts a few weeks sooner or later, but if it cuts by less or more than the rest of the world over the next two years,” said George Saravelos, global head of forex research at Deutsche Bank.

“We continue to see the risks skewed towards less Fed easing and therefore in favor of the U.S. dollar,” he added.

The euro was flat at $1.0743.

German industrial orders unexpectedly jumped in December, while euro zone consumers have trimmed their expectations for inflation over the next 12 months.

“A potential repricing of the ECB (European Central Bank) policy path towards a first rate cut in June instead of April, which we regard as likely, would prop up the euro in the medium term,” said Roberto Mialich, forex strategist at UniCredit.

The Reserve Bank of Australia (RBA) earlier on Tuesday left rates unchanged, but cautioned about a possible further monetary tightening.

The Aussie rose 0.33% to $0.6515, inching away from the 2-1/2 month low of $0.6469 it touched on Monday.

The repricing of the RBA monetary path “helps to provide modest support for the Australian dollar in the near-term,” said Lee Hardman, senior currency analyst, at MUFG.

“Sentiment towards the Aussie has also been boosted indirectly overnight by the rebound in the Chinese equity market where speculation is building over further state policy action to provide stability,” he added.

Sterling edged slightly higher to $1.2588, but remained close to Monday’s seven-week low.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that UK unemployment was likely much lower late last year than previously thought, which could push out British rate cuts too.

The Japanese yen was stronger on the day at 148.00 per dollar, a bit off from a two-month low of 148.90.

Japan’s real wages fell for a 21st straight month, though at a slower pace, while household spending dropped for a 10th consecutive month, showing inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Herbert Lash, additional reporting by Stefano Rebaudo and Ankur Banerjee in Singapore; Editing by Jamie Freed, Mark Potter and Ros Russell)

By Patrick Wingrove and Bhanvi Satija

(Reuters) – Eli Lilly on Tuesday forecast 2024 profit above Wall Street estimates on soaring demand for Zepbound, its recently approved weight-loss drug, and said it would have new supply from expanded manufacturing capacity as soon as this year.

Explosive demand for diabetes treatment 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.

Lilly announced on an investor call that its new Concord, North Carolina site would begin producing Zepbound and Mounjaro, both known chemically as tirzepatide, as early as the end of the year, with products available to ship in 2025.

Lilly said it expects to produce one and a half times as many sellable doses in the second half of 2024 as it did in the second half of last year.

The Indianapolis-based drugmaker said while it will expand manufacturing capacity, it expects demand for Mounjaro and Zepbound to outpace supply in 2024.

Zepbound sales reached $175.8 million in the first few weeks of its launch, following U.S. approval in November, Lilly said.

“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.

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.

Shares were off about 1% at $696.82 after gaining about 11% in January, making Lilly the eighth largest company in the U.S. by market capitalization and most valuable healthcare company.

Truist analyst Robyn Karnauskus raised her price target for the company to $850 from $650.

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

Finance chief Anaz Ashkenazi addressed this week’s news that contract manufacturer Catalent will be sold to the parent company of Novo Nordisk since that company also makes drugs for Eli Lilly.

Novo, which manufactures the weight-loss drug Wegovy and related diabetes treatment Ozempic, is Lilly’s main rival in the obesity market.

Ashkenazi said Catalent was an integral manufacturer of both commercial and pipeline products for the industry, especially in diabetes and obesity, “and we have products with these sites as well.”

She told investors the company will hold Catalent accountable to their contract, as it seeks more information about the deal, while CEO David Ricks told the Financial Times that Novo’s proposal to buy three of Catalent’s plants was “unusual” and raises potential antitrust concerns.

Both companies are testing their treatments for other health benefits such as heart disease, obstructive sleep apnea and chronic kidney disease, which could expand insurance coverage for the medicines.

Lilly on Tuesday said tirzepatide met the main goal of a mid-stage trial for a difficult to treat fatty liver disease formerly known as NASH and now called metabolic dysfunction-associated steatohepatitis, or MASH.

It 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 say whether they

were statistically significant, they said.

The drugmaker on its call said the study was not designed to demonstrate statistically significant improvement in liver

scarring.

Still, the data sent shares of other companies developing drugs for the fatty liver disease tumbling. Madrigal Pharmaceuticals was down more than 18%, Akero Therapeutics was off 10% and 89Bio shares fell 16%.

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 Andrea Shalal

WASHINGTON (Reuters) – Community organizers and Democratic elected officials on Tuesday urged Democrats to cast an “uncommitted” vote in Michigan’s Feb. 27 Democratic nominating contest to protest President Joe Biden not calling for a permanent ceasefire in Israel’s attacks on Gaza.

The “Listen to Michigan” campaign aims to encourage Democrats and independent voters across the battleground state, with sizable numbers of Arab and Muslim residents, to protest Biden’s handling of the crisis in the Middle East.

Layla Elabed, a Palestinian-American community organizer and the younger sister of U.S. Representative Rashida Tlaib, said the effort was focused on the primary election for now, unlike the nationwide Abandon Biden campaign that is urging voters to pick “anybody but Biden” in November’s general election. Biden is expected to face a rematch with Republican former President Donald Trump.

Dearborn Mayor Abdullah Hammoud will join the initiative, along with faith leaders and other community leaders, she said. Hammoud and other Arab-American leaders skipped a meeting last month with Biden’s campaign manager, demanding dialogue over the administration’s policy, not electoral politics.

Biden’s campaign did not respond to a request for comment on the new campaign. Michigan is among the seven states his campaign considers an election battleground because their voters’ preferences could swing to either party and determine the outcome of November’s race.

Biden visited the Midwestern state last week, winning a pledge of support from union autoworkers crucial to his reelection bid in Michigan, while protests over his backing of Israel’s actions in Gaza shadowed the trip. His candidacy for the Democratic nomination does not face serious competition.

The “Listen to Michigan” campaign’s website, with graphics in the colors of the Palestinian flag, offers detailed instructions on how to register to vote and cast an “uncommitted” ballot.

The “uncommitted” vote was used by then-candidate Barack Obama to win momentum in Michigan in 2008 after Michigan Democrats violated Democratic National Committee rules by moving the state’s primary in the nominating calendar, and Obama and other Democrats stayed off the ballot.

Elabed, who said she voted for Biden in 2020, told Reuters the campaign was aimed at spurring a dialogue with him, but stressed that even calling for a ceasefire and ending military aid to Israel would not guarantee the votes of the 80% of Michigan Democrats who now back a ceasefire.

“It means that we can start to have a conversation. It means that we can have some confidence that … we’re not on the back burner … and that our grievances and our rally cry to end the genocide are heard and taken seriously.”

The World Court late last month, ruling on a case brought by South Africa, ordered Israel to take action to prevent acts of genocide, but stopped short of calling for an immediate ceasefire. Israeli Prime Minister Benjamin Netanyahu said the charge of genocide leveled against Israel was “outrageous,” and said it would do whatever is necessary to defend itself.

Biden has faced criticism and protests in Dearborn, which is 54% Arab American, and from anti-war voices around the country for his support for Israel’s operations in Gaza.

The latest Middle East war erupted on Oct. 7 when Hamas attacked Israel, killing 1,200 people. Israel has since assaulted Hamas-governed Gaza, killing over 27,500 people, according to the local health ministry. Nearly all of Gaza’s 2.3 million population is displaced. The densely populated enclave also faces starvation.

Biden aides have said a broad ceasefire now would benefit Hamas, but the administration has called for more limited halts in fighting to allow for the release of hostages taken by Hamas and the distribution of aid to Gaza residents.

(Reporting by Andrea Shalal; Editing by Trevor Hunnicutt)