Eli Lilly sell-off shows investors are misinterpreting a study that we view as positive
Every weekday the CNBC Investing Club with Jim Cramer releases the Homestretch audio feature in time for the last hour of trading on Wall Street. Here’s today’s edition. We have seen some strength come back to the S & P 500 since the Morning Meeting. These gains come despite the uptick in Treasury yields Monday. While the market is higher it’s still very rotational as money is moving out of the Magnificent 7 mega cap techs and flowing into other areas, giving a boost to the broadening out of the market rally. While the tech sector is lagging Monday, shares of semiconductor-and-software stock Broadcom (AVGO) are surging roughly 9%. When Broadcom reported a mixed fiscal fourth quarter results Thursday, after-hours, there wasn’t much activity on the stock. But as analysts digested the report, the stock is moving higher. This could be as a result of CEO Hock Tan aggressively buying back stock like he said he would in its post-earnings call before the end of the year. Shares of Starbucks (SBUX) also making a nice move of 2% after falling 12 straight sessions previously. What was needed for the stock to stabilize was the admission from CEO Laxman Narasimhan that the China recovery has progressed slower than expected. One notable laggard, however, is Eli Lilly (LLY). Shares are getting hit on data that was previously announced but was published in the American Medical Association, showing that users of Lilly’s drug Zepbound regained roughly half the weight they lost when they stopped taking the drug. We don’t understand the pullback today because the thought is, if you gain half the weight back after stopping use of the medication, that strengthens the argument around one being on it for the rest of their life which is a positive for Lilly. Part of the selloff could be due to money rotating out of year-to-date winners. Eli Lilly has significant outperformed other pharma stocks over the past two years. (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.
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