This week on Weekly Market Movers, Gary covers the following:

• SpaceX’s much‑anticipated IPO, which was roughly 4x oversubscribed and raised $75 billion.
• How the proceeds are expected to be invested across AI, launch infrastructure, orbital data centers, and satellites.
• What the SpaceX deal signals for the broader IPO market.
• Key takeaways from the latest CPI release.
• What investors may expect from new Fed chair Kevin Warsh.

Watch the full video:

TRANSCRIPT:

Hello, everyone. Welcome to this edition of Weekly Market Movers. My name is Gary Quinzel with Wealth Enhancement. Last week, the market ended on a high note.

The S&P 500 ended the week up 0.35%, but it was not always looking so good. In the middle of the week, we once again saw some volatility stemming from news coming out of the Middle East. But here we are, turning the page into the new week, and we have some positive news around an agreement, so fingers crossed that will hold. Taking a look at the different sectors last week, we did continue to see stronger performance out of some of the riskier indices, such as the MSCI Emerging Markets Index, the Philadelphia Semiconductor Index, as well as the tech-heavy NASDAQ 100.

A lot of that, of course, is driven by technology and particularly semiconductors, which continue to be quite strong. If we shift gears and look at the bond side, the Bloomberg U.S. Aggregate Bond Index ended the week up around 0.6%, which is not too bad. But we did see a little bit of a sell-off in some of the safe-haven assets. Take a look at the dollar index, as well as gold, with gold down around 2.6% after being quite strong for several years.

Oil continues to sell off. Of course, that is directly related to headlines coming out of Iran. Whether or not there will be a deal, every time speculation surges that we will have a deal, we see oil go down, and so WTI crude oil was down around 7% last week alone. But let’s take a look at some of the key economic drivers, because I think the marquee release of the week definitely had to be the CPI print, that is, consumer price inflation, for May, which was released on Wednesday, and it did come in hotter than expected. We saw the headline print come in at 4.2% year over year. It is the highest it has been since early 2023.

That certainly fueled speculation that the Fed’s next move could be a rate hike to stem inflation because, of course, that is well north of where the Fed wants inflation to be. However, on the positive side, if you take a look at the core CPI print, which takes out the price of food as well as energy, that was up less than expected. It was only up 0.2% month over month, so that provided a little bit of relief that broader inflation may, in fact, be somewhat contained. At the same time, we did see producer inflation, PPI, come in very hot at plus 6.5% year over year, which again suggests that we still have significant price pressures in the pipeline.

So, we are certainly not out of the woods yet, and it is going to remain top of mind for the Fed in the immediate future. That said, of course, this is Fed week. This is new Fed chief Kevin Warsh’s first meeting as Fed chair, and so no moves are expected when the announcement comes on Wednesday. However, all eyes will certainly be on Kevin Warsh, and analysts will be dissecting every word he says in his post-meeting communication to help determine what the next move will be.

If you take a look at Fed futures, which we often talk about, they suggest that the market is now pricing in one, if not two, rate hikes this year, which is certainly a significant departure from where we were at the start of the year when we were expecting rate cuts. It is also quite interesting because, as President Trump’s nominee, who has very publicly called for lower rates, Kevin Warsh will be in a somewhat tight situation here trying to navigate that, and all eyes will certainly be on that going forward. But if we take a look at what is going on across the pond, the European Central Bank did actually hike rates for the first time in three years. And just thinking about what is going on from a rate perspective, the U.S. Treasury offered $120 billion in bonds last week.

So, on top of the inflation pressures, that adds supply pressures as well to the situation. We are continuing to maneuver around this higher-for-longer rate environment. Of course, higher supply puts upward pressure on bonds. The last thing I want to talk about, the marquee event of the week last week, was certainly the big SpaceX IPO, which we talked a lot about.

It took center stage, and it really lived up to its hype. It was long-awaited, the biggest IPO of all time, and it was a huge success by almost any measure. The company, which is now valued at over $2 trillion and trading higher today, continues to rewrite the rules in whatever it does, including forcing indices to rethink or rewrite the rules by which new companies are added into major benchmarks. So a lot will be determined in the coming days and weeks about how and when SpaceX is included in certain major indices.

The shares were priced at $135 per share. The company raised $75 billion, which is going to be invested in its AI and launch infrastructure, as well as things like orbital data centers and satellites. It is a really exciting time, and that all factored into why the IPO was roughly four times oversubscribed and just emphasizes the massive enthusiasm surrounding AI in general and, of course, Elon Musk’s bold ambitions. What is really interesting, if we take a look at the broader landscape of IPOs, is that we had SpaceX last week.

At some point this year, we are now going to have Anthropic and OpenAI as well. So there is definitely a shift in gears in the amount of equity issuance expected this year. If you think about it, for the last couple of decades, we have actually been in a retractionary period or era where we have seen massive company buybacks as opposed to issuance. So, on a net basis, the amount of equity has shrunk, and that has been a tailwind for stocks.

But we are starting to see that reverse this year, with new equity issuance on its fastest pace since 1999. So a lot of things are happening, as always. A lot of things are moving the markets. We, of course, always have our concerns around valuations, geopolitical issues, and overall volatility, but it is just another reason to stay diversified in a globally diversified portfolio that is appropriate for your goals and in line with your objectives. And as always, if you have any questions about the markets or what is going on, reach out to your advisor. That is all for this week.

Thanks for listening. Take care.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor’s specific circumstances. There is no guarantee that asset allocation or diversification will enhance overall returns, outperform a non-diversified portfolio, nor ensure a profit or protect against a loss.

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