Article published at 8:55 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- It’s a ho-hum start to trading as indices lay low
- Fed meeting starts, with FOMC direction and rate decision on tap
- SpaceX shares are ascending — again
After a heavy volume day of trading to kick off the week, today’s early markets look like they’re in for a rest. The three major indices were either hugging the flatline or making moderate moves to the upside in the early going.
That’s in stark contrast to Monday’s remarkable moves, which fanned the Dow Jones Industrials to a record intraday peak, up nearly 1% at the close, while driving a 3.1% gain on the Nasdaq Composite and the S&P 500 higher by 1.7%. The markets could get squirmy today or tomorrow, considering triple witching is actually this week on Thursday. (Markets are closed on Friday for the Juneteenth holiday.) When stock options, stock index options and stock index futures all expire on the same day, it could lead to some intense volatility.
Eyes are on the Federal Reserve’s Open Market Committee meeting, which starts today and ends tomorrow with an interest rate decision. Wall Street widely expects the central bank to keep rates solidly in place at 3.5% to 3.75% range for the time being. Investors will be watching for what direction Kevin Warsh, in his debut as Fed chairman, will take the interest-rate setting group.
Yesterday’s heavy moves forward were propelled by news that the U.S.-Iran war could reach a final accord to end the four-month conflict, beginning with a memorandum of understanding slated to be in inked Friday. This morning, the Dow opened just barely into the green while the Nasdaq and the S&P were slightly down.
WTI crude dropped below $80 for the first time since early March amid hopes that oil containers may be able to get through the Strait of Hormuz toll-free soon. In the early going, crude was lower better than 3% to $78. While that’s good for everyone’s pocketbook, analysts are reminding investors that the devil of oil containers passing effortlessly through the strait is in the details, which have not been released. Stay tuned.
Another day, another high double-digit vault in shares of SpaceX, which closed up 20% in its second full day of trading. SpaceX shares are ascending yet again today, up as much as 11% in early going of explosive growth after its Friday debut. The space and AI innovator said it will purchase Anysphere for $60 billion. The software firm is parent of Cursor, another AI coding platform.
And no surprises here: SpaceX underwriters helped rocket the total gross proceeds from the initial public offering to a mind-blowing $85.7 billion, the company said early Monday. After they exercised the so-called “green shoe” share overallotment, the space and AI company’s brokers, which were led by Morgan Stanley and Goldman Sachs, sold the 83.3 million shares.
As a reminder, this is a company that will continue to spend money for years as it invests in its aspirations, something we’re seeing more of with the high-speed — and costly — growth of AI. However, Elon Musk, master dream-maker, said on his social media platform X that he thinks SpaceX can reach about $1 trillion in revenues by 2030, adding “I would be surprised if revenue is not greater than $1T in 2031.”
In other market news, chipmaker Nvidia jumped on the AI debt bandwagon, announcing that it completed a $25 billion bond deal that would help finance AI infrastructure and data center projects as well as refinance existing debt. The debt sale is a test of further investor appetite to the AI sector’s borrowing flood. Shares were flat early on after yesterday’s 3% upward move.
Investors apparently aren’t taking too kindly to Fox Corp.’s plan to purchase Roku, the leading streaming platform that will give Fox access to Roku’s 100,000-strong membership. Fox shares dove nearly 18% after the media company said it is forking over $22 billion, or $160 a share, to take over Roku. That is the deepest one-day selloff since Fox went public in 2019. Year-to-date, its shares are down some 26%, and Roku shares tumbled 1.9% to $140.90.
It also noted that the two companies are “committed to continuing to operate Roku as an open, partner-friendly platform and to the continued ubiquitous distribution of Fox content.” That last part, couple with the gap between the purchase price and Roku’s share price, seemed to spook investors, according to published reports. Shares of both companies are trending lower in early trading. Much of that downside is reflective of how investors are still trying to figure out how this deal will shake out.
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