Every weekday, the CNBC Investment Club with Jim Cramer publishes Homestretch, a handy evening update, just in time for the final hour of trading on Wall Street. Markets: The Dow and S&P 500 were down Friday after climbing to record highs Thursday in response to the Fed cutting interest rates by 50 basis points. It’s been a strong week for stocks, with the S&P 500 gaining about 1.5%. The best-performing sectors for the week to date were energy, communication services, financials and industrials. Only three sectors were on track for a down week: real estate, consumer staples and health care. Obesity Drugs: New information often sends a company’s stock up and sends its biggest competitor down. Take a look at the Club’s namesake Eli Lilly stock. They were trading higher in a weak market after a key competitor in the obesity space reported disappointing Phase 2 trial results. That competitor, Novo Nordisk, said Friday that its drug monlunabant, which is a small-molecule oral cannabinoid receptor (CB1) inverse agonist, showed about 6% weight loss at 16 weeks. This was a big disappointment. The results fell short of those of Lilly’s leading daily oral GLP-1 drug orforglipron, which showed about 8% weight loss at 16 weeks and was well below what Novo had previously suggested. Analysts at Deutsche Bank called the trial results disappointing, adding that it “removes the threat of a large, well-capitalized small-molecule competitor to LLY’s orforglipron.” Competition in the obesity space is set to intensify in the coming years, but this disappointment from Novo Nordisk shows how difficult it is to make a safe and effective drug. That’s why we’ve long disagreed with Eli Lilly being sold when a competitor puts out a press release for an early-stage trial. Some drugs will work, some won’t. Some will be very effective, some won’t make any changes. Some will have safety and tolerability issues. That’s the nature of business. But what we know now is that Eli Lilly’s lead isn’t going away anytime soon thanks to its current line of obesity drugs, strong product portfolio, and massive manufacturing scale. Cybersecurity Stocks: In other scenarios, both a company and its competitor can rise in price on new news. CrowdStrike stock rose after the cybersecurity company held its annual conference. One of the key revelations from the event was the very low customer churn following the global IT outage it caused in July. Recall that we initially had the view that competitors like Palo Alto Networks would take advantage of this event to promote their products. However, we can’t say we’re entirely surprised to see very few customers leaving CrowdStrike. When we looked at Palo Alto’s August quarter, the results didn’t show a huge shift in market share as a result of the outage. Sure, the quarter was good because Palo Alto has a great product and value proposition, but it didn’t suggest a massive exit from CrowdStrike. Both companies are great. So why isn’t Palo Alto stock going down? CrowdStrike’s commentary likely indicated that cybersecurity spending remains healthy, which benefits both companies. Next up: We’ll see a pickup in earnings next week. Some notable reports are from KB Home, which will provide insight into housing, and Micron, which will give us a good look at demand and inventory levels for high-bandwidth memory (which powers AI chips) as well as cell phones and personal computers. Jefferies, which is always a good read on banks, and Club name Costco, which is a good read on consumer spending, are also due out next week. (See here for a full list of 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 executes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust portfolio. If Jim has discussed a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY VIRTUE OF YOUR RECEPTION OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Every weekday, CNBC's Investment Club with Jim Cramer publishes Homestretch, a practical afternoon update, just in time for the final hour of trading on Wall Street.
