Dow Hits New All-Time High Yesterday, Other Indexes Finish Lower Ahead Of This Afternoon's FOMC AnnouncementStocks closed mostly lower yesterday with only the Dow finishing in the plus column. They added 0.64%, and made a new all-time high in the process. For those keeping track, SpaceX was up again yesterday, picking up another 4.83% to close at $201.80. That's in addition to their 19.2% gain on Friday's IPO-day. And another 19.6% on Monday. All in all, they are up 49.5% from their IPO price of $135. Note, SpaceX underwriters exercised their Greenshoe option, and acquired an additional 83.3 million shares (over-allotment) on Monday. That increases total shares outstanding (a roughly 0.64% dilution), and dilutes public shares (float) by roughly 15%. But generally speaking, if underwriters choose not to exercise the option, it's usually because demand is weak and the price has fallen below the IPO offer price. A fully exercised Greenshoe option signals strong demand. And in spite of the initial dilution, it's a bullish sign for investors if the exercise takes place. In other SpaceX-related news, SpaceX is buying the artificial coding assistant Cursor for $60 million. The deal is expected to close in Q4 of this year. Remember, SpaceX also owns xAI (which owns X). And SpaceX also owns Starlink. Stocks likely took a breather ahead of this afternoon's FOMC Announcement. This will be the first meeting and announcement helmed by the new Fed Chairman Kevin Warsh. Additionally, we'll get the Fed's next SEP (Summary of Economic Projections), which only comes out 4 times a year (quarterly). And it will provide outlooks for GDP, unemployment, and the Fed Funds rate, for the next 3 years. The latest FOMC Minutes from the Fed meeting in May, showed the Fed as somewhat split, with some looking for rate cuts, while others were considering possible rate hikes if inflation persists. Last quarter's SEP, however, still suggested a quarter point rate cut by year's end. We'll see if that sentiment remains in this quarter's SEP or if that is modified. We'll also hear from Mr. Warsh himself, as he gives the customary Fed Chair Press Conference at 2:30 PM ET. That follows the FOMC Announcement, which comes out at 2:00 ET. Yesterday's Housing Starts and Permits report showed Starts at 1.177 million units (annualized) vs. last month's downwardly revised 1.392M (from 1.465M), and views for 1.430M. Permits came in at 1.413M vs. last month's downwardly revised 1.423M (from 1.442M), and estimates for 1.427M. In addition to the FOMC Announcement, we'll also get MBA Mortgage Applications, Retail Sales, Business Inventories, the Pending Home Sales Index, and the Atlanta Fed Business Inflation Expectations. Regarding the U.S.-Iran peace agreement, the Memorandum of Understanding (MOU) will have its official signing ceremony on Friday, June 19, in Switzerland. While talks around implementation of various aspects of the deal will be hashed out over the next 60 days, both sides have said that ships have started to move again through the Strait of Hormuz. Crude oil fell another -4.50% yesterday. From its conflict high back in April, it's down -35.5%. FYI -- it's a shortened trading week this week as the markets will be closed on Friday, 6/19, for Juneteenth. So Thursday is the last trading day before a 3-day long weekend. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research |
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