Here are 4 forces that caused a difficult week for stocks
Posted by Israel News | Jul 27, 2026 | Health | 0 |
It’s been a tough week for stocks as investors navigated everything from escalating tensions in the Middle East to key earnings reports from the tech sector to developments in healthcare. The S&P 500 posted its second straight weekly loss, slipping 0.6%, while the tech-heavy Nasdaq fell 2.1%. Here’s a closer look at what drove the trading action. Oil prices are back in power. Oil prices rose for the third week in a row 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 rose on Monday after President Donald Trump warned that Iran would pay “many times over” for the deaths of three US soldiers. They gained momentum over the week after Trump renewed threats 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. Fears intensified on Thursday that the conflict could spread beyond Iran after Houthi militants claimed attacks on Saudi oil tankers in the Red Sea, sending Brent crude above $100 a barrel for the first time since the U.S. and Iran reached a tentative ceasefire deal last month. While oil prices fell on Friday on hopes of a resumption of U.S.-Iran peace talks, this week’s sharp rise underscored how quickly geopolitical tensions can change the market’s narrative. The rise in crude oil prices renewed inflation concerns and pushed the 10-year Treasury yield to its highest level since January 2025. With the Federal Reserve meeting next week, the chances of a rate hike increased. According to the CME FedWatch tool, markets are now pricing in a nearly 35% chance of a quarter-point rate hike, down from 13% a week ago. Wall Street is raising the bar on AI spending. Artificial intelligence remained a dominant earnings theme this week, and investors made one thing clear: They are no longer willing to reward massive spending without seeing a clear path to returns. Club holding Alphabet was the clearest example after reporting better-than-expected sales and earnings and Google Cloud year-over-year growth of 82% on Wednesday evening. Shares of the Google parent company fell 7% on Thursday as investors focused on Alphabet’s decision to raise its capital expenditure (capex) forecast again. Management now expects to spend between $195 billion and $205 billion on capital expenditures this year and is signaling that spending will increase again in 2027. As free cash flow turns negative, Wall Street is becoming increasingly skeptical that hyperscalers can continue to pour hundreds of billions of dollars into AI infrastructure without any financial return. Alphabet was the fourth-worst performer in the Club portfolio this week, down 7.8%. Investment levels will be in focus when our three other hyperscalers – Amazon, Meta Platforms and Microsoft – report next week. Club name Intel’s results last Thursday evening showed the other side of the story. The chipmaker posted its strongest quarterly revenue growth since 2011, driven by a 59% increase in data center revenue as companies continue to invest aggressively in AI infrastructure. However, we were a little disappointed that Intel didn’t announce a major foundry customer. On Tuesday, Intel announced cybersecurity company Fortinet as its first named foundry customer. There are rumors that several other companies, including Apple, are working with Intel, but no formal agreements have been announced. Intel opened higher on Friday but reversed lower to close down nearly 8%. This puts Intel down 3% this week. GE Vernova’s mixed data center earnings were a prime example of why investors need to look beyond the headlines. Shares fell about 8% on Wednesday after the club holding company missed Wall Street’s earnings per share (EPS) estimate. While failure is never ideal, we believe investors have been focusing on the wrong metric. The more important number was order growth, which rose 88%, driven by exceptionally strong demand in the company’s energy and electrification businesses, which are critical to running AI data centers. For a company like GE Vernova, orders are a far better indicator of future growth than quarterly profits because they reflect customer demand rather than past shipments. To us, this is exactly the kind of long-term story that investors should embrace. Shares of GE Vernova rallied 4.7% on Thursday but fell 1.6% on Friday. They ended the week down about 4.1%. Dover, on the other hand, reiterated why we think it’s time to move on. Shares of the industrial company fell nearly 8% on Thursday after a mixed quarter. Profits narrowly exceeded expectations, but sales fell short of expectations. While the company has significant exposure to attractive long-term growth areas such as AI data centers, these businesses only represent about 25% of expected 2026 revenue. The rest of its portfolio is spread across a number of slower-growing industrial companies, making it difficult for investors to view Dover as a pure beneficiary of the AI themes driving the market. We have already reduced the position twice in June and achieved double-digit increases. Dover shares rallied 2.2% on Friday but ended the week down 5.6%. Healthcare Catalysts While technology dominated much of the week’s attention, two of the club’s healthcare names served as a reminder that some of the market’s most compelling long-term growth stories go beyond AI. Eli Lilly announced encouraging late-stage data for its next-generation obesity drug, triple-acting retatrude. Shares rose 2% on Thursday’s news. The therapy has caused a stir as it showed greater weight loss than Lilly’s own Zepbound and Novo Nordisk’s Wegovy. Investors initially focused on management delaying its regulatory filings until the first quarter of 2027. We believe the more important insight is how Lilly plans to submit the application. Instead of using the traditional route for new drugs, the company intends to file retatruide as a biologic, a route that generally provides stronger intellectual property protection and exempts the drug from Medicare price negotiations under the Inflation Reduction Act. In our view, a slightly later launch is a reasonable compromise if it extends the commercial life of what could become one of Lilly’s most valuable products. Shares of Lilly rose 1.4% this week. Johnson & Johnson also delivered a major positive surprise after the FDA approved its Ottava robotic surgery system months earlier than investors expected. Shares rose 2% on Wednesday on the news. The approval gives J&J an entry into the fast-growing robotic surgery market, long dominated by Intuitive Surgical, and represents a major catalyst for its MedTech business, which has recently underperformed the company’s pharmaceutical segment. J&J shares ended the week up 4.1%. (A complete list of Jim Cramer’s Charitable Trust stocks can be found here.) As a subscriber to 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 foundation’s portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. THE INVESTING CLUB INFORMATION SET FORTH ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, ALONG WITH OUR DISCLAIMER. THERE IS NO fiduciary obligation or duty IN RECEIVING YOUR INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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