The S&P 500 fades despite tech rally — plus, the crosscurrents driving Lilly's volatile day
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market moves : The S & P 500 turned negative Thursday afternoon after shares of major drugmakers came under pressure from President Donald Trump over prescription prices. Trump posted on social media letters that were sent to 17 pharmaceutical companies, including Club names Eli Lilly and Bristol Myers Squibb , asking them to cut U.S. drug prices. The letters mention the executive order the president signed in May that aims to reduce drug prices in the U.S. by comparing them to what’s paid in other developed nations. This pricing push is separate from the sector-specific tariffs that Trump has threatened the pharmaceutical industry with. The stock market would look a lot worse if it weren’t for the big post-earnings moves in Club names Meta Platforms , up 12%, and Microsoft , up 4%. Microsoft became the second stock to join the $4 trillion club, following fellow portfolio member Nvidia , which did so earlier this summer. But as of this writing, Microsoft was off its session highs and appeared unlikely to close above that market cap threshold. Tariff deadline : The S & P 500 had been rallying for much of the session but was losing steam even before the drug price news. Investors might be dealing with a little bit of a hangover from Wednesday when Federal Reserve Chairman Powell hesitated to pencil in an interest rate cut in September due to caution about whether tariffs will be inflationary. We will also watch out for more trade deals ahead of Friday’s Trump administration-imposed “reciprocal” tariff deadline. Treasury Secretary Scott Bessent told CNBC on Thursday morning the U.S. has the “making of a deal” with China. In the afternoon, Trump froze Mexico’s tariffs at 25% for 90 days as talks continued. The European Union made a trade deal with the U.S. on Sunday. Other countries reaching deals with Trump included Japan last Thursday and the United Kingdom back on May 8. Diabetes trial : In other Lilly news, the company announced the topline results of its highly anticipated SURPASS-CVOT Phase 3 trial on Thursday. This was a head-to-head trial comparing Mounjaro (tirzepatide) versus Trulicity (dulaglutide). Both drugs are in the GLP-1 class. The goal of the study was to prove that Mounjaro is an acceptable alternative in treating patients with Type 2 diabetes with cardiovascular risk. The results confirmed just that. While some of the more bullish investors were hoping for a more significant superiority, we still view the outcome as a positive step forward. It means Mounjaro’s label will potentially expand to include cardiovascular risk reduction, an update that could drive broader insurance coverage. That said, this trial update is not the most important factor on our radar when it comes to Lilly. That event will be next week’s earnings — and more specifically, what management says about sales expectations for Mounjaro and sister drug Zepbound in the second half of the year, especially in light of Novo Nordisk’s surprise guidance cut earlier this week. While Novo’s stumble makes it clear that Eli Lilly is gaining share in the lucrative GPL-1 market, we sold some shares on Tuesday to hedge against the possibility that GLP-1 market growth did not expand as fast as predicted, impacting the company’s guidance. Shares of Lilly opened Thursday lower before mounting a comeback, only to rollover into the red after Trump went public with his drug price threats. As of 2:45 p.m. ET, shares of Lilly were down about 2%. At its highs of the day, the stock was up about 0.8%. Up next : Apple and Amazon report after Thursday’s close. In addition to those two “Magnificent Seven” stocks, Reddit , Coinbase , Roku , Cloudflare ,and MicroStrategy report earnings. Before Friday’s opening bell, we will get earnings from Club name Linde , Exxon Mobil , Chevron , Colgate-Palmolive , Regeneron and Dominion Energy . On the data side, the July nonfarm Payroll report will be out Friday morning. According to FactSet, the economy is expected to have added 115,000 jobs for the month. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
