What we learned last week:
“Good and bad don’t factor into this, until it [the world] starts running on something else, we got feed it, or the world stops.” – Tommy Norris, Landman
Wall Street finished higher to end the week, turning around an early-week selloff. Investors weighed inflation data, developments in the Middle East, and of course the debut of SpaceX. It was the 10th time in 11 weeks that the benchmark S&P 500 had a positive week.
The volatile week of trading started over concern the ceasefire in Iran would escalate into the possibility of kinetic war. Markets reacted to Tuesday’s retaliation strikes lunched by the U.S. on Iran for the downing of an Apache helicopter, which President Trump said was shot down by Iran.
Further threats from President Trump on Wednesday, saying Iran has taken too long to negotiate a peace deal and will now “pay the price” pushed oil prices higher.
Thursday President Trump said that the U.S. made a “great settlement of the war with Iran” driving oil prices back down.
Friday, Iran’s Foreign Minister confirmed, saying a memorandum of understanding “has never been closer.” The deal is reported to include a commitment from Iran to reopen the Strait of Hormuz. The news continued to pull oil prices down below $90 a barrel – a welcomed sight for investors and businesses and heading below $80 a barrel for the first time since March.
The events dove tail nicely into last week’s consumer price index (CPI) and produce price index (PPI) reports for the month of May. Both reports showed the increase in prices matched economists’ expectations. Even with higher energy prices, investors are optimistic inflation will not be a risk to the U.S. economy, specifically the consumer.
Of course, this week’s commentary is not complete until SpaceX IPO is covered.
The company’s initial public offering raised a record $75 billion and priced its stock at $135 a share. The concern over the company’s financial health did not stop a successful first day of trading, finishing its first day of trading at 160.95. The company has almost $19 billion in revenue and posted a $4.9 billion loss last year and since its founding has racked up to over $41 billion in total losses.
Optimism over the future of space exploration and SpaceX’s role in orbital launches and its Starlink satellite business are central to the stock’s story. It is expected to maintain higher levels of volatility as buyers and sellers digest its value ahead of earnings reports later this year.
Moving on to the week ahead, it is a shortened week with the Juneteenth holiday on Friday. Falling oil prices should continue to provide momentum for stocks early in the week. The middle of the week investors’ attention will be on the Federal Reserve and their Fed Funds rate decision. This will be the committees first meeting under the leadership of Chairman Kevin Warsh. It is widely expected the Fed will hold rates, but it may be what Warsh says or doesn’t say at the post meeting press conference that adds color to investors’ expectations for future interest rates.
What’s ahead this week:
Economic Events
- Retail Sales report will be looked at with interest as rising energy prices has put pressure on the US consumer
- Wednesday the first Fed interest rate decision and press conference for the new Fed Chairman Warsh will be heavily watched
- Big week of data for the housing market, specifically new build housing industry
Earnings
- Quite week for earnings, June 24th is the next big earnings date as memory chip designer, developer, manufacturer, Micron reports.
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
