Wall Street stumbles as oil surges, and Lilly takes a new path on next-gen obesity drug
Wall Street faces pressure today as rising oil prices and shifting interest rate expectations weigh on market sentiment. U.S. benchmark WTI crude has climbed above $90 per barrel, while Brent crude topped $100. This spike in commodity prices fuels inflation fears and drives the 10-year Treasury yield to 4.70 percent, its highest point since early 2025. Investors are adjusting to a higher probability of a Federal Reserve rate hike in September, with current projections sitting at 83 percent.
Alphabet shares saw a significant decline of over 6 percent on Thursday. The market responded negatively to the company's negative free cash flow in the second quarter and a higher outlook for capital expenditures. Despite management arguments regarding the value of long-term AI buildouts, investors remain concerned about the immediate return on invested capital.
Eli Lilly provided a different story, announcing late-stage trial results for its next-generation obesity drug, retatrutide. While the initial market reaction focused on a Q1 2027 FDA filing date, the company is pursuing a Biologics License Application rather than a traditional New Drug Application. This regulatory route offers specific commercial protections, including exemption from Medicare price negotiations under the Inflation Reduction Act.
Looking ahead, market participants are focused on incoming corporate earnings. Intel is set to report results after the closing bell, while Friday morning features reports from American Express, Verizon, Charter Communications, SLB, and HCA Healthcare. Economic data remains a focal point as investors watch for the latest manufacturing and services PMI figures alongside June new home sales.