Next week: Markets face concerns over rising interest rates, SpaceX’s IPO, and key inflation data

TLDR

• The S&P 500 fell 2.6% last week, and the Nasdaq fell 4.7% as markets expected interest rate hikes.
• May CPI data falls on Wednesday, with headline inflation expected to reach 4.2% year-on-year
• SpaceX is scheduled to go public on Friday at $135 per share, valuing the company at $1.78 trillion.
• Both Oracle and Adobe reported earnings this week, providing a read on demand for AI infrastructure
• Bitcoin ended the week around $60,000, 50% below its record highs

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Investors are heading into a busy week with inflation data, historic IPOs and headline earnings all on the calendar. The general mood on Wall Street is cautious after the violent selling witnessed on Friday.

Markets took a hit last week

The S&P 500 closed Friday down 2.6%, ending a nine-week winning streak. The Nasdaq fell 4.7% for the week, its worst stretch in months. The Dow Jones lost 0.6%.

The selling was triggered by a stronger-than-expected jobs report. The US economy added 172,000 jobs in May, nearly double estimates of 88,000 jobs. This led to markets pricing in at least one rate hike before the end of the year.

Bitcoin He also took a hit. It ended the week around $60,000, 50% below last year’s record highs. Fears of rising interest rates have affected cryptocurrencies along with stocks.

The University of Michigan Consumer Confidence Index reached an all-time low of 44.8 in May. Americans are concerned that war with Iran will push prices up and slow the economy.

Inflation data will set the tone

The biggest economic event this week is the May CPI report on Wednesday.

The headline CPI rose 3.8% year-on-year in April. Economists now expect growth to accelerate to 4.2% in May. The war with Iran has largely closed the Strait of Hormuz, through which 20% of the world’s oil normally passes. Gas prices already rose more than 28% year over year in April.

The core CPI, which excludes food and energy, is expected to reach 2.9% for May, up from 2.8% in April. This indicates that oil price inflation is starting to seep into other parts of the economy.

The Producer Price Index follows on Thursday. It rose 6% year-on-year in April, suggesting that higher input costs are still working their way through the system.

The combination of strong growth, a tight labor market and steady inflation means the Fed will likely need to adjust policy, said James Egelhoff, chief US economist at BNP Paribas. Markets are now watching for any sign that an interest rate hike is coming.

SpaceX IPO and Oracle earnings in focus

Friday is expected to witness the largest initial public offering in history. SpaceX It plans to list on the Nasdaq at $135 a share, giving it a valuation of about $1.78 trillion.

The company’s forecast puts its total addressable market at $28.5 trillion, more than 90% of which is related to its AI business, which focuses on space data centers. Analysts at LPL Financial have warned that heavy reliance on unproven AI technology could result in a rough ride for new investors.

The Nasdaq recently relaxed its index listing rules, meaning SpaceX could be added to the Nasdaq 100 within weeks of listing. This would force index fund managers to automatically buy stocks.

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Oracle on Wednesday announced its fiscal fourth-quarter earnings. The stock is up 12% year to date. Analysts expect demand for AI to sustain cloud revenue growth. Oracle is one of the largest issuers of corporate debt in its sector, with the Big Five expected to issue $175 billion worth of bonds in 2026.

Adobe reports on Thursday.