On Thursday, stocks experienced mixed performance as Treasury yields rose and expectations for a Federal Reserve rate hike increased. The S&P 500 and Nasdaq Composite managed to recover from earlier losses, aided by positive news regarding a potential U.S.-Iran deal affecting oil supply.
The 10-year Treasury yield reached approximately 5.15%, the highest since 2007, while Brent crude oil prices climbed to $108 a barrel. Fed funds futures now indicate a 68.6% likelihood of a rate hike in October, up from 55% a week prior. In corporate news, Starbucks announced the closure of about 250 underperforming North American cafes, which represents roughly 1% of its footprint.
CEO Brian Niccol's strategy aims to enhance profitability, with expected restructuring charges of $300 million. Analyst Jacob Aiken-Phillips from Melius Research views this move positively, suggesting that sales from closed stores may shift to nearby locations, ultimately benefiting margins.
Despite a year-to-date increase of 11%, Starbucks shares have fallen 14% since late August due to broader consumer stock sell-offs. Meanwhile, Eli Lilly received FDA approval for its once-weekly insulin, Onswik, which could reduce the number of injections for type 2 diabetes patients.
However, analysts believe this drug will have a minimal impact on Lilly's long-term sales, as its strength lies in its GLP-1 franchise and recent acquisitions. Lilly's shares rose over 3% following the announcement. Investors are also awaiting Costco's earnings report, with a focus on membership metrics, as the retailer has seen an 18% decline since its record close in May