JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Stock volume was slow Friday compared with options, leading to shorter selloff
- SpaceX IPO on target to make history
- Apple expected to shed light on AI efforts
The markets look like they are in recovery mode after Friday’s hit, buoyed somewhat by the S&P 500’s rebalancing moves, which are officially effective in two weeks. After Friday’s close, it was announced that the tech-heavy index will add Marvell Technology and Flex to the index, replacing consumer-focused firms Campbell’s Co. and Pool Corp.
In pre-market trading, Marvell shares were up almost 9%, regaining some of Friday’s 17% pullback. Flex shares were adding nearly 7%. Campbell’s stock was rising nearly 3% after the household foods maker posted earnings that modestly outpaced Wall Street’s expectations.
Last week the markets started off on a good foot – both the Dow Jones Industrial Average and the S&P 500 Index hit fresh intra-week peaks – but lost step after a better-than-expected U.S. jobs report. Coupled with a deep sell-off in chip stocks, the Nasdaq got crushed and spilled over to other indices. Nasdaq gave up 4.2%, marking its worst trading day since April 2025. The S&P 500 Index lost 2.6% and the Dow was set back by 1.4%.
One thing I noted is that the stock trading volume was not particularly heavy on Friday, but it was one of the busiest days ever in the options market. I believe that means investors were doing other things, like hedging or taking profits off the table. It also tends to lead to a shorter selloff duration, which looks like what we’re seeing today.
Friday’s decline started after the Bureau of Labor Statistics said nonfarm payrolls jumped by 172,000, more than double the 80,000 Wall Street was expecting and marking a three-month trend. The hardy job creation didn’t move the needle on the unemployment rate, which stands at 4.3%. That could mean that the job pool is widening, especially as new college graduates enter the arena.
While a robust job market might be considered a good thing, especially when it’s teamed with growing corporate profits and a mostly heady stock market. However, this stresses the market because more jobs mean more money in the system, which means that inflationary pressure continues. This then is in line with pressure to raise interest rates.
Consider Treasury yields, which serve as a benchmark for numerous consumer and corporate loans: The 10-year leapt above 4.5% and the 30-year rose above 5%, suggesting investors may be bracing for higher inflation. Yields continue to inch higher in pre-market trading.
That selloff was also stoked by fears that the Federal Reserve may find itself in need of a rate hike to tame inflation before the year is up. Today, the CME Fed watch tool stands at a 96% probability that the Fed will hold rates steady at the 3.5% to 3.75% target range when it convenes for the first time with its new chair Kevin Warsh on June 17. However, the lever is heavily leaning toward possible rate increases by December. It’s still too early to make a call but some analysts believe that could raise borrowing costs for AI buildouts.
Among the biggest items on this week’s agenda, if not the biggest, is SpaceX’s planned initial public offering, set for a Nasdaq debut on June 12. Elon Musk’s rocket, satellite and AI company is looking to sell 555,555,555 shares at $135 a piece, according to last week’s filing with the Securities and Exchange Commission (SEC).
This is setting up to be the largest IPO in history, which could raise nearly $75 billion, and is likely to be the most talked about IPO this week. Here’s another interesting part: At that number, its valuation reaches an eye-popping $1.77 trillion valuation that is nearly double what it was just six months ago. What’s more, it is expected to birth a handful of new millionaires and potentially make Musk, already the richest man on earth, the world’s first trillionaire.
SpaceX is also among the first of large AI firms to sell shares. Anthropic has already filed a confidential prospectus and OpenAI is widely expected to file soon, with a public debut anticipated in September.
Analysts are looking for how the firm, will stem the bleeding on AI stakes. It currently has Starlink as the financial lynchpin funding most everything with its $11.4 billion in revenues and $4.4 billion operating profit last year. I’m keeping a close watch on how this unfolds.
But for today, Apple’s Worldwide Developers Conference, dubbed WWDC26, will kick off online and in an exclusive invitation-only and lottery-based ticket event with a keynote presentation in Cupertino, California. This will mark Chief Executive Tim Cook’s swan song as he hands over the reins to John Tenus. Cook will become executive chairman.
Investors are looking to hear what’s in the pipeline for software updates, including iOS 27, iPadOS 27, macOS 27, and visionOS. Moreover, they expect to hear about an extensive overhaul of Siri as Apple races to catch up with AI innovations.
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