Eli Lilly and J&J bounce on new data, as software stocks give up last week's gains

Breaking news from the markets: 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 lower to start the week. On one hand, AI component trade is surging, with memory chip stocks like Micron and Sandisk extending last week's gains and optical names including Corning , Marvell Technology , and Coherent also rallying.

The flip side of that action is pressure on hyperscalers, also known as the "spenders," who are footing the bill for the tech hardware. Software stocks also sold off as investors grew antsy about the prospects of private equity firm Silver Lake buying enterprise software provider Workday . It was reported last Thursday that the two sides had discussed a potential takeover, sending Workday shares to their best day since 2016.

Economic Details

Other software stocks, including Salesforce , quickly rose on the report as shorts scrambled to cover their positions. But with no new developments on a potential deal, some of that enthusiasm is fading, and the group is giving back last week's gains. Software pressure over the past two sessions has brought down the shares of CrowdStrike and Palo Alto Networks , even as management commentary on past earnings calls has shown that advancements in AI are accelerating, not disrupting, their businesses.

In the background, interest rates continued to creep higher , with the 10-year yield crossing 4. The move in rates comes ahead of Wednesday's release of the minutes from the Fed's July FOMC meeting, which may provide clues about how the committee views monetary policy ahead of next week's Jackson Hole Economic Policy Symposium, where many of the world's top central bankers, economists, and policymakers meet to discuss economic issues. Our two pharma stocks are trading higher on Monday , and we want to circle back to a note from analysts at Leerink.

For background, every week Leerink tracks U. drug market demand and reports weekly prescription trends on Friday, using data from the healthcare data and analytics provider IQVIA. According to the latest report, Eli Lilly's oral GLP-1 drug Foundayo is starting to gain ground on Novo Nordisk's oral Wegovy.

Analyst Views

While the Wegovy pill had more prescriptions during the week ending Aug. 7 at about 163,000, the total fell 5% week over week. Foundayo, in contrast, saw its total prescriptions increase 14% to about 38,900.

The timing of Lilly's market share gains aligns perfectly with the timeline management shared on its August earnings call , where the team explained that marketing has just begun to ramp up and consumer awareness is growing. While it's true that the Wegovy pill got off to a fast start and provides slightly greater weight loss, we always thought Foundayo would be the better option for patients seeking weight-loss maintenance because it has no time-of-day or food-and-water restrictions.

Economists are analysing what the news means for the markets.