It’s been a tough week for stocks, as investors grappled with everything from tensions in the Middle East to earnings reports from major tech companies to trends in health care. It was the second consecutive week of declines, with the S&P 500 down 0.6% and the tech-heavy Nasdaq dropping 2.1%. Now let’s take a closer look at what triggered the trading action. Oil prices are back in the driver’s seat Oil prices have soared for the third consecutive week due to uncertainty over the Iran war. U.S. benchmark West Texas Intermediate crude rose more than 8%, while international Brent crude rose nearly 10%. Oil prices soared on Monday after President Donald Trump warned that Iran would pay “many times more” in reparations for the deaths of three U.S. service members. They gained momentum throughout this week after President Trump again threatened to bomb Iranian bridges and power plants and Secretary of State Marco Rubio said Tehran was not serious about reaching a deal to end the fighting. By Thursday, concerns that the conflict could spread beyond Iran were heightened after Houthi militants claimed to have attacked a Saudi oil tanker in the Red Sea and the price of Brent crude exceeded $100 a barrel for the first time since before the United States and Iran reached an interim ceasefire last month. Oil prices fell on Friday on hopes of restarting peace talks between the US and Iran, but this week’s sharp rise highlighted how quickly geopolitical tensions can reshape the market narrative. Rising oil prices have reignited inflation concerns, pushing the 10-year US Treasury yield to its highest level since January 2025. The possibility of a rate hike has increased ahead of next week’s Federal Reserve meeting. According to the CME FedWatch tool, the market is currently pricing in a nearly 35% chance that interest rates will rise by a quarter of a point, compared to just a 13% chance a week ago. Wall Street raises the bar on AI spending Artificial intelligence continued to be the dominant theme in earnings this week, and investors made one thing clear. That means investors are no longer willing to reward huge spending without a clear path to return. The Alphabet-owned club became the clearest example after reporting better-than-expected revenue and revenue on Wednesday night, as well as 82% year-over-year growth for Google Cloud. Shares of Google’s parent company fell 7% on Thursday as investors focused on Alphabet’s decision to raise its outlook for capital spending again. Management now expects to spend between $195 billion and $205 billion in capital spending this year, suggesting spending could rise again in 2027. As free cash flow turns negative, Wall Street is increasingly skeptical that hyperscalers can continue to pump hundreds of billions of dollars into AI infrastructure without showing bigger financial returns. Alphabet was the fourth worst performer in the club’s portfolio this week, dropping 7.8%. Capital spending levels will be a focus when the other three hyperscalers (Amazon, Meta Platforms, and Microsoft) report next week. Inter’s result last Thursday night told the other side of the story. The chipmaker achieved its best quarterly revenue growth since 2011, as data center revenue rose 59% as companies continued to invest aggressively in AI infrastructure. However, I was a little disappointed that Intel didn’t announce the foundry’s major customers. On Tuesday, Intel announced cybersecurity company Fortinet as its first named foundry customer. Several other companies, including Apple, are rumored to be partnering with Intel, but no formal agreement has been announced. Intel opened higher on Friday, but reversed and closed down nearly 8%. This brings Inter’s deficit this week to 3%. GE Vernova, with mixed returns on data center exposure, was a great example of why investors need to look beyond the headline numbers. Shares fell about 8% on Wednesday after the club’s holdings fell short of Wall Street’s earnings per share (EPS) estimates. While failure is never ideal, investors may be focusing on the wrong metrics. The more important number was order growth, which surged 88%, driven by very strong demand across the company’s power and electrification businesses, which are key to operating AI data centers. For companies like GE Vernova, orders are a better gauge of future growth than quarterly revenue because they reflect customer demand rather than past deliveries. To us, this is exactly the long-term story that investors should embrace. GE Vernova stock rose 4.7% on Thursday, but fell 1.6% on Friday. It ended the week down about 4.1%. Meanwhile, Dover highlighted why he thinks it’s time for us to move on. The company’s stock fell nearly 8% on Thursday as profits narrowly beat expectations but sales fell short. The company has significant exposure to attractive long-term growth areas such as AI data centers, but those businesses account for only about 25% of its expected revenue in 2026. The rest of the company’s portfolio is spread across a range of industrial businesses with slower growth, making it difficult for investors to view Dover as a pure beneficiary of market-driving AI themes. In June, we already reduced the position twice and secured double-digit profits. Dover stock rebounded 2.2% on Friday, but ended the week down 5.6%. Healthcare Catalyst While technology dominated this week’s attention, two healthcare-related names in the club served as a reminder that some of the market’s most compelling long-term growth stories lie beyond AI. Eli Lilly announced promising late-stage data for its next-generation obesity treatment triple-drug retatortide. Shares rose 2% on Thursday’s news. The therapy sparked excitement because it showed greater weight loss than Lilly’s own Zepbound and Novo Nordisk’s Wegovy. Investors initially focused on management pushing regulatory filings to the first quarter of 2027. We think the more important point is how Lilly plans to apply. The company intends to submit letaltortide as a biologic drug rather than using the traditional new drug pathway, which generally provides stronger intellectual property protection and exempts the drug from Medicare price negotiations under the Inflation Control Act. In our view, slightly delaying the launch is a reasonable trade-off if it extends the commercial life of what could be one of Lilly’s most valuable products. Lilly stock rose 1.4% for the week. Johnson & Johnson also delivered a significant positive surprise after the FDA approved its Ottava robotic surgery system months earlier than investors expected. Shares rose 2% on Wednesday’s news. The approval gives J&J a foothold in the fast-growing robotic surgery market, long dominated by Intuitive Surgical, and is a key catalyst for the company’s medtech business, which has recently lagged behind the company’s pharmaceuticals division. J&J stock ended the week up 4.1%. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
