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Investors step into the week after SpaceX's (SPCX) debut on Friday marked the largest public offering in history, with Elon Musk's company closing out the trading session valued at $2.1 trillion. Meanwhile, updates from the Middle East signaled hope that the US and Iran could be close to signing a deal that would reopen the Strait of Hormuz.
The S&P 500 (^GSPC) closed Friday up 0.5%, good for a marginally stronger return of 0.6% on the week. The Dow Jones Industrial Average (^DJI) ended the session up 0.7% for an identical gain on the week. In a similar fashion, the Nasdaq Composite (^IXIC) ended Friday up 0.3% for a five-day gain of 0.7%.
With the craze of the SpaceX IPO in the rearview mirror, all eyes turn to the Federal Reserve's meeting on Wednesday, where the FOMC is widely expected to hold rates steady. More interestingly, the meeting will be Kevin Warsh's first as chairman, with his post-decision press conference set to be a key read on the new regime.
Elsewhere, the calendar is relatively quiet for investors. Manufacturing production data on Monday will give investors a look at the physical side of the economy, following last week's monthly release of the Producer Price Index, which showed wholesale prices advanced at the fastest rate since November 2022.
In the corporate world, earnings from Accenture (ACN) on Thursday offer investors a vibe check on the state of the information technology sector.
After days of speculation over where SpaceX (SPCX) shares would begin trading on Friday, the first sale crossed the wire at 11:46 a.m. ET, priced at $150 per share, or an 11% premium over the IPO price of $135.
The roughly 20% run-up afterward was good for a market cap of about $2.1 trillion, making SpaceX the sixth-biggest company in the market and making Elon Musk the modern era's first trillionaire — all on the promise that the AI market can be bigger, better, and, eventually, orbital.
"SpaceX going public is an important moment for the broader tech sector in our view as this AI Revolution and data takes this next step forward," Wedbush Securities managing director Dan Ives wrote to clients on Friday.
One big question for investors looking forward: Will Musk merge Tesla (TSLA) into SpaceX, giving himself dominant control of a combined entity that would include SpaceX and all of its businesses; Tesla's EV and robotics market; and xAI, which merged with SpaceX in February?
The two companies are already closely linked. Tesla holds a $2 billion stake in SpaceX, and it has also integrated SpaceX's Starlink connectivity into some deployments, including remote service and charging applications where terrestrial internet is limited. Wedbush Securities assigns an 80% or greater chance that the two entities will become one.
"Musk wants to own and control more of the AI ecosystem," Ives wrote. "Step by step the holy grail could be combining SpaceX and Tesla in some way to give the connected tissue between both disruptive tech stalwarts looking to lead the AI Revolution in this next tech chapter for the market."
The outcome of Wednesday's Federal Reserve meeting has largely been priced in as a done deal: The Federal Open Market Committee will leave rates unchanged, with one quarter-point hike to come later in the year. But that doesn't make the situation any less precarious for Kevin Warsh, the newly minted Fed chairman, who will helm his first meeting on Wednesday.
Even as President Trump insists on rate cuts, Warsh and the broader Fed governors will have to contend with inflation data that keeps rising. Data out last week showed consumer prices in May advanced at their fastest rate since 2023, while producer prices rose at their fastest rate since 2022. Payroll figures have landed above estimates for several months in a row, but the unemployment rate hasn't moved.
"This year's strong growth, gradually tightening labor market and persistently high inflation strike us as markedly different to what officials expected when the Fed cut rates last fall, and we expect monetary policy to adjust accordingly," James Egelhof, chief US economist of BNP Paribas, wrote to clients after the May jobs report showed 172,000 jobs added, far exceeding estimates.
One other thing Warsh will have to address: AI and its impacts on both economic growth and the labor market. He'll have to answer questions on topics such as whether AI is boosting workers' wages or, on the other side, putting people out of jobs and pressuring the unemployment rate.
"We expect the inflationary impacts of the AI build-out will be an important part of the FOMC's discussion," Macquarie strategists Thierry Wizman and Gareth Berry told clients. "Any evidence that AI is creating inflation (because of higher investment activity in the short- and medium term) will challenge — in a practical way, for Fed policy — Kevin Warsh's views of AI as being disinflationary in the long term."
Investors looking for relief from the largest energy supply shock on record received welcome news on Friday that the US and Iran may be closing in on a deal to reopen the Strait of Hormuz and begin winding down a war that has roiled the global economy.
The text of the deal has not yet been made public, and a cacophony of various terms coming from an array of sources has only added to the confusion for investors trying to sort through what's real.
State-affiliated Iranian media has reported that terms include a withdrawal of US forces from the region, the release of $24 billion in frozen Iranian funds held abroad, the removal of US Treasury sanctions on sales of Iranian oil, and "reconstruction plans" for Iran worth around $300 billion.
US officials, on the other hand, have said the deal includes a reopening of the Strait of Hormuz, destruction of Iran's supply of enriched uranium, and a gradual unfreezing of Iranian assets if they comply with the agreed terms.
Oil prices were down on the news, but are still well above pre-war levels — a sign for investors that even if a deal is signed, a long road back to normalcy awaits the oil market.
"Cumulative losses have now reached 1 billion barrels and are on track to nearly double by year-end under our base case, which still assumes a narrow US-Iran deal in June and a phased reopening of the Strait of Hormuz from mid-July," Aditya Saraswat, MENA research director at Rystad Energy, wrote in a client note.
"But that base case is under pressure. Each additional month of conflict adds roughly 350 million barrels to cumulative losses, with a growing share that will never come back."
Economic data: Empire manufacturing, June (13.0 expected, 19.6 previously); Industrial production, month-on-month, May (+0.3% expected, +0.7% previously); Manufacturing production, month-on-month, May (+0.3% expected, +0.6% previously); NAHB housing market index, June (36 expected, 37 previously)
Earnings calendar: Regencell Bioscience Holdings (RGC)
Economic data: ADP weekly employment change, week ended May 30 (+29,000 previously); Import price index, year-on-year, May (+5.7% expected, +4.2% previously); Export price index, year-on-year, May (+8.8% previously); New York Fed services business activity, June (-5.8 previously); Housing starts, month-on-month, May (-2% expected, -2.8% previously)
Economic data: Federal Reserve interest rate decision; MBA mortgage applications, week ended June 12 (+10.8% previously); Retail sales advance, month-on-month, May (+0.5% expected, +0.5% previously); Retail sales ex auto, month-on-month, May (0.5% expected, 0.7% previously); Business inventories, April (+0.5% expected, +0.9% previously)
Economic data: Initial jobless claims, week ended June 13 (225,000 expected, 229,000 previously); Continuing claims, week ended June 6 (1.8 million expected, 1.795 million previously); Philadelphia Fed business outlook, June (12 expected, -0.4% previously)
Earnings calendar: Accenture (ACN), The Kroger Co. (KR)
Economic data: Market closed for Juneteenth, no notable economic data.
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