The market likes what it heard from the Fed — plus, Lilly’s new $6B manufacturing investment
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Market moves : Stocks rose and bond yields fell Wednesday afternoon after the Federal Reserve cut its interest rate target range by a quarter point to 3.5% to 3.75%. The S&P 500 was looking at a possible record high close. Nine of the 12 voting members of the central bank’s policy-making committee supported the rate cut; We see this as a positive, as there is some discussion about further splitting the vote. Two of the opponents, Austan Goolsbee and Jeffrey Schmid, favored keeping rates steady. Stephen Miran asked for a half-point deduction. Wednesday’s Fed rate cut was the third move this year. The so-called dot plot of individual member expectations has signaled a Fed cut next year and into 2027, but we don’t want to read too much into that because the data will ultimately determine future rate cut decisions. The market projects a 68% chance of two or more rate cuts in 2026, according to the CME FedWatch tool. Fed Jerome Powell said in the post-meeting press conference that monetary policy is not yet accommodative. The Fed is making good progress on non-tariff inflation, he said, adding that it wouldn’t hurt to wait to see whether tariffs will raise prices next year. He also said the labor market was cooling slightly faster than expected. The Fed also announced that it would once again purchase short-term bonds, but for technical reasons unrelated to monetary policy. New facility : Eli Lilly announced another major U.S. manufacturing commitment late Tuesday. The pharmaceutical giant said it plans to invest more than $6 billion in a facility in Alabama that will produce the oral GLP-1 drug orforgliprone, which is expected to receive FDA approval and be released early next year. The one line we liked in the press release was that Lilly plans to use “cutting-edge technologies, including machine learning, artificial intelligence, digitally integrated monitoring systems, and advanced data analytics to ensure correct execution the first time.” Right the first time is a pillar of the Six Sigma business philosophy; It refers to completing jobs correctly on the first try, with minimal need for rework and corrections. The idea may not be new for Eli Lilly, and we don’t know if Nvidia is involved in the AI component, but it highlights how broader advances in physical AI and digital twin technology can help companies reduce waste and increase efficiency in the design of new facilities. Stock Eli Lily has been through a rough patch lately. A positive outcome on Wednesday could break the nine-session losing streak dating back to November 26. The stock reached a record closing high of approximately $1,110 on November 25. This was just days after it surpassed the $1 trillion market cap for the first time. We last reduced the position to 1 trillion dollars on November 18. Next up: There’s a big tech earnings night with Oracle, Adobe, and Synopsys scheduled to report. Ciena will report its quarterly results before the opening bell on Thursday. On the data side, we will also receive weekly unemployment claims figures on Thursday morning. (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 waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
