New data boosts our confidence in Lilly's obesity pill. Plus, Google's new AI features

An important development from the financial 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. Markets are slightly lower on Tuesday, with the S & P 500 on pace for its third down session in a row. For most of the session, there was a rotation out of AI buildout names into software , but it lost steam as the day progressed and reversed.

For example, Salesforce was up around $8 per share to $187 before turning negative on the day. The main story in the market right now is all about interest rates. With energy prices stubbornly high due to uncertainty around the Strait of Hormuz and Iran war, fears of inflation are rippling through the bond market.

Economic Details

The climb in Treasury yields continued, with the 10-year yield jumping to 4. 665% and the 30-year yield hitting 5. 19%, its highest level in almost 19 years.

Rising rates and high energy prices can hurt consumer spending and slow the economy ( Home Depot's lackluster results are a good example of this), hence the buying Tuesday of defensive, non-cyclical names like healthcare. Eli Lilly shares have additional reason to be higher, adding over 2%. In a note to clients Tuesday, analysts at Citigroup published positive findings from their survey of oral GLP-1 physicians.

Some of the big takeaways we already knew. About half of the surveyed physicians expect oral GLP-1 medications to bring new people into the drug class, and many patients who previously stopped taking injectables are being restarted with orals, or are thinking about restarting with pills. This is all positive for category growth, but was mostly understood by us, as we heard on Lilly's late April earnings call that about 80% of the prescriptions for its oral Foundayo are for people who previously weren't taking a GLP-1.

Analyst Views

What we care more about is the debate between Foundayo and Novo Nordisk's Wegovy pill, the only competing drug on the market. Our view is Foundayo will win out in time, but this thesis has been tested early on, given the oral Wegovy launch was far more successful than Foundayo. To be fair, Novo had the first-mover advantage and immediate recognition of the same brand name as its injectable.

But Lilly's pill has a key advantage over Wegovy in that it does not have any food or water restrictions. That's why we were pleased to see in the Citi survey that 74% of endocrinologists say Wegovy's fasting requirements are having a some impact on their prescribing decision. This suggests doctors are willing to trade weight-loss efficacy, where Wegovy may have a slight edge, in favor of ease of use.

Doctors willing to give up a few points of efficacy in favor of no fasting requirements have us feeling more confident that Foundayo will narrow the market share gap over time. Citi analysts estimate Foundayo sales will hit $2. 8 billion in 2026, well above the consensus expectation of about $1.

Financial markets are tracking the development closely as investors assess the likely impact.