Here are 4 forces that drove a tough week for stocks

It's been a tough week for stocks, with investors navigating everything from rising tensions in the Middle East to key tech earnings reports to healthcare developments. Posting its second straight weekly loss, the S&P 500 fell 0.6%, while the tech-heavy Nasdaq fell 2.1%. Here's a closer look at what's driving trading action. Oil prices are back in the driver's seat. Oil rose for the third consecutive week due to the uncertainty of the Iran war. U.S. benchmark West Texas Intermediate crude rose more than 8%, while international Brent crude rose nearly 10%. Oil prices rose Monday after President Donald Trump warned Iran would pay the price "many times over" for the deaths of three US soldiers. It gained momentum throughout the week after Trump threatened to bomb bridges and power plants in Iran again and Secretary of State Marco Rubio said Tehran was not serious about reaching a deal to end the conflict. Fears that the conflict could spread beyond Iran intensified on Thursday after Houthi militants attacked Saudi oil tankers in the Red Sea, sending Brent crude above $100 a barrel for the first time since the United States and Iran reached a temporary ceasefire agreement last month. While oil prices fell on Friday on hopes of resuming US-Iran peace talks, the week's sharp rise underlined how quickly geopolitical tensions can shape market discourse. The rise in crude oil reignited inflation concerns, pushing the yield on the 10-year Treasury note to its highest level since January 2025. With the Fed meeting to be held next week, the possibility of an interest rate increase has increased. Markets are now pricing the odds of a quarter-point rate hike at almost 35%, up from just 13% a week ago, according to the CME FedWatch tool. Wall Street is raising the bar on AI spending Artificial intelligence continued to be the dominant theme in earnings this week, and investors made one thing clear: They're no longer willing to reward big spending without seeing a clear path to a return. Club Holding Alphabet was the clearest example of this on Wednesday evening after reporting that its revenue and earnings were better than expected and that Google Cloud was growing 82% year over year. Shares of the Google parent company fell 7% on Thursday as investors focused on Alphabet's decision to once again raise its capital expenditures (capex) outlook. The administration now expects to spend $195 billion to $205 billion on capital expenditures this year and has signaled that spending will increase again in 2027. With free cash flow turning negative, Wall Street is increasingly skeptical that hyperscalers can continue pouring hundreds of billions of dollars into AI infrastructure without showing a greater financial return. Alphabet fell 7.8% this week, making it the fourth-worst performer in the Club portfolio. Capex levels will be in focus when our other three hyperscalers (Amazon, Meta Platforms, and Microsoft) report next week. The results obtained by the club name Intel last Thursday night told 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 businesses continued to invest aggressively in AI infrastructure. But we're a little disappointed that Intel didn't announce a major foundry customer. On Tuesday, Intel announced that cybersecurity company Fortinet has become its first foundry customer. Many other companies, including Apple, are rumored to partner with Intel, but no official deal has been announced. Intel opened higher on Friday but closed lower, losing nearly 8%. This gave Intel a 3% return for the week. The mixed earnings reveal data center GE Vernova provided a prime example of why investors should look beyond the headline numbers. Shares fell nearly 8% on Wednesday after Club holding missed Wall Street's earnings per share (EPS) forecast. While missing out is never ideal, we think investors are focusing on the wrong measurement. The more important figure was order growth, which increased by 88%, driven by exceptionally strong demand in the Power and Electrification businesses, which are key to powering the firm's AI data centres. For a company like GE Vernova, orders are a much better indicator of future growth than quarterly earnings because they reflect customer demand rather than past deliveries. In our view, this is exactly the type of long-term story investors should embrace. GE Vernova shares rebounded 4.7% on Thursday but fell 1.6% on Friday. They closed the week down approximately 4.1%. Dover, on the other hand, reinforced why we thought it was time to move on. Shares of the industrial firm fell nearly 8% on Thursday after a mixed quarter; While earnings slightly exceeded expectations, revenues fell short. While the company has meaningful access to attractive sustainable growth areas such as AI data centers, these businesses account for only 25% of its expected 2026 revenue. The rest of its portfolio is spread across a collection of slower-growing industrial businesses, making it difficult for investors to view Dover as a pure beneficiary of the AI themes driving the market. We already made double-digit gains by reducing the position twice in June. Dover shares rebounded 2.2% on Friday but finished the week down 5.6%. Healthcare catalysts While technology dominated much of the week's spotlight, two of the Club's healthcare figures reminded us that some of the market's most compelling long-term growth stories exist beyond AI. Eli Lilly announced that it has incentivized late-stage data for its next-generation obesity drug, the tri-action retatrutide. Shares rose 2% on Thursday's news. The therapy caused a stir because it showed greater weight loss than Lilly's own Zepbound and Novo Nordisk's Wegovy. Investors initially focused on management pushing regulatory filings to the first quarter of 2027. The more important takeaway, in our opinion, is how Lilly plans to file. Rather than using the traditional new drug route, the company plans to offer retatrutide 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 would extend the commercial life of what could become one of Lilly's most valuable products. Lilly's shares gained 1.4% for the week. Johnson & Johnson also delivered a significant positive surprise after the FDA approved its Ottawa robotic surgery system months earlier than investors expected. Shares rose 2% on Wednesday's news. The approval gives J&J a foothold in the fast-growing robotic surgery market long dominated by Intuitive Surgical and provides a key catalyst for its MedTech business, which has recently lagged behind the company's pharmaceutical segment. J&J shares finished the week up 4.1%. (See here for a complete list of stocks in Jim Cramer's Charitable Trust.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation's portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. 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