Dow eyes new record as Fed meeting begins and SpaceX rises after IPO

TLDR

• The Dow rose more than 300 points on Tuesday and is on track for a second straight record close
• The S&P 500 and Nasdaq fell slightly into negative territory as technology stocks fell
• Markets are closely watching the Fed’s June meeting, the first meeting under new Chairman Kevin Warsh
• Hopes for reopening the Strait of Hormuz are fading quickly, as experts say it could take six months for oil flows to normalize.
• SpaceX shares extended their gains for a third day, pushing the company closer to surpassing Amazon in market cap

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The Dow Jones Industrial Average rose more than 300 points on Tuesday, putting it on track for a record closing high for the second straight day. The S&P 500 and Nasdaq are both slightly lower, hovering just below the flat line.

Monday’s march was prompted by a peace agreement between the United States and Iran that raised hopes of reopening the Strait of Hormuz. But these hopes are quickly cooling.

The relief march in the Strait of Hormuz is losing steam

President Trump posted on social media that ships should “start their engines” before the promised reopening of the strait on Friday. However, analysts warn that the path back to normal is not so simple.

David Rosenberg, of Rosenberg Research, said it could take up to six months for the movement of oil through the waterway to normalize. This means that energy-related disruptions to the economy are unlikely to be resolved quickly.

Although low Oil prices On Tuesday, bond yields remained high. The yield on the 10-year Treasury note held steady near 4.46%, and the two-year yield was around 4.08%.

Some market watchers see stubbornly high yields as a sign that investors are focused on what comes next from the Fed, not just the situation in Iran.

Fed meeting under new Chairman Kevin Warsh

Fed officials began their June meeting on Tuesday. A rate decision is expected Wednesday afternoon – the first news conference under the leadership of Chairman Kevin Warsh, who is supported by President Trump.

The Fed is widely expected to keep interest rates steady. But many on Wall Street are watching the dot chart closely for any signs that interest rate hikes are likely later in the year.

The latest inflation data has been hotter than expected. The conflict in Iran has pushed energy prices higher, keeping upward pressure on prices.

BTIG’s Jonathan Krensky noted that markets often “test” new Fed chairs. He pointed to the 30-year Treasury yield as one to watch, warning that a move above 5.05% could signal increasing market pressure on Warsh.

The Bank of Japan also raised its benchmark interest rate on Tuesday to its highest level in 31 years, citing rising price pressures.

SpaceX is trending towards Amazon’s market cap

SpaceX Shares rose for the third straight day following the company’s IPO. The Elon Musk-led company is now approaching Amazon’s market cap.

If SpaceX overtakes Amazon, it will become the world’s fifth-largest company by market capitalization. The stock opened higher on Tuesday, continuing its post-IPO momentum.

The Dow Jones gains came as oil prices fell and investors shifted focus to the upcoming Federal Reserve meeting. As of Tuesday morning, the Dow Jones was up about 0.6%, with any closing gains hitting a new all-time high.