Wall Street stumbles as oil surges, and Lilly takes a new path on next-gen obesity drug
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. Stocks are pulling back Thursday as several crosscurrents weigh on the market. It’s a difficult moment, and what’s currently holding us back from buying this dip is the move in oil and the impact it has on bond yields. As the conflict in the Middle East continues, oil prices are surging, with U.S. benchmark WTI crude back above $90 per barrel and international standard Brent topping $100 per barrel. The move in commodities is fueling inflation concerns and pushing bond prices lower, sending the yield on the 10-year Treasury to 4.70%, its highest level since January 2025. Monetary policy expectations can change rapidly, but this week has been a tough one for the doves. Although current market probabilities still suggest the Federal Reserve will hold rates unchanged at next week’s Federal Open Market Committee meeting, the odds of a hike at the subsequent meeting are rising fast. The market now sees a roughly 83% chance the Fed hikes in September, compared to 53% one week ago, according to CME FedWatch tool . On top of rate-hike concerns , Alphabet’s negative free cash flow in the second quarter and an increased full-year capital expenditure outlook raise concerns that it and other hyperscalers are not earning an adequate return on their invested capital to support the AI buildout. While the company management teams believe otherwise , the market is penalizing them for spending more. We’re inclined to side with Alphabet due to its growing profit dollars across the business, but the results weren’t enough to shake the narrative. With a more than 6% decline Thursday, Alphabet shares are on pace for their worst day of the year. In more positive news, Club name Eli Lilly announced positive results for two late-stage trials evaluating retatrutide, its next-gen obesity medication that delivers more weight loss than fellow injectables Wegovy (made by Novo Nordisk ) and Lilly’s own Zepbound. While some on the Street have viewed this medication as targeted for patients who quickly need to lose weight, a growing number of voices believe the opportunity could have more mass-market appeal than previously thought. Still, the bigger story may be that Lilly plans to submit the drug for approval to the Food and Drug Administration in the first quarter of 2027. At first blush, this was viewed as a disappointment to those who expected to see an FDA filing before year-end. However, a key difference in the regulatory pathway could have positive implications for long-term investors. There are two primary pathways pharmaceutical companies use to seek FDA approval: the traditional New Drug Application(NDA) and theBiologics License Application (BLA).Eli Lilly said it is submitting retatrutide — also known as “triple G” because it targets three hormones involved in regulating appetite that start with the letter “G” — through a BLA. That’s a key distinction from both tirzepatide (the active ingredient in Lilly’s Mounjaro and Zepbound) and Novo Nordisk’s Wegovy, which both went through an NDA process. There are significant advantages for filing under a BLA, which is typically reserved for biologic therapies. These are large, complex molecules made from living cells or organisms, and they’re often used to treat conditions such as cancer and autoimmune disorders. Biologics also generally benefit from stronger commercial protection and are exempt from Medicare price negotiations under the Inflation Reduction Act, which covers several traditional small-molecule drugs each year. Lilly was able to file retatrutide as a BLA thanks to a U.S. district court decision in October. The bottom line is that retatrutide may come to market a little later than expected, but the BLA pathway provides stronger commercial protection, which could ultimately make the drug more valuable over its lifecycle. Looking ahead on the earnings front, Club name Intel reports after the closing bell, and we expect to see strong data center server CPU sales and growing support for its third-party foundry offerings. Before the opening bell on Friday, we’ll see earnings from American Express , Verizon , Charter Communications , SLB , and HCA Healthcare . On the data side, Friday morning brings the S & P Global U.S. manufacturing and services PMI for July and new home sales for June. (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.
