Last Week
The stock market started trading below ground level but finished in outer space.
Developments in the war set the negative tone early in the week, as President Trump threatened a renewed barrage and the Iranians shot down a U.S. military helicopter. On a related note, inflation accelerated in May, with the Consumer Price Index rising 4.2% year-over-year, matching economists’ expectations.
Later in the week, President Donald Trump announced that a planned U.S. military operation had been canceled as negotiations moved closer to a possible agreement involving several countries across the region. A stock market rally followed.
Attention then turned to SpaceX’s initial public offering on Friday, the largest in history, raising $75 billion in capital. The shares traded up +19% as strong investor demand fueled gains. The market’s reaction to SpaceX’s record-setting IPO came as little surprise to North Star CIO Eric Kuby, who told Reuters that investor enthusiasm was expected given the overwhelming demand for the offering and the company’s position at the forefront of a rapidly evolving industry.
Also on Friday, President Trump said that a peace deal had been agreed to and would be signed on Sunday, and on that optimism, the broad market moved higher. The headline numbers suggest it was a slightly positive week, with the S&P 500 rising 0.65% and the Nasdaq Composite adding 0.70%. Small caps, on the other hand, were like rocket ships as the Russell 2000 soared 3.9%. As long-time small-cap managers, we continue to see compelling opportunities in an area of the market that has often been overlooked. Please contact us if you would like additional information on our small-cap strategies.
Advancing issues more than doubled declining issues, with only the Oil & Gas and Technology sectors failing to finish in the green. Gold continued its recent slide, dropping another 2%, while Crude Oil sank 6%, matching its lowest level since the outbreak of the war. The yield on the 10-year Treasury inched 5 basis points lower to 4.49%, and the Dollar held steady.
We asked our North Star intern team what they considered the most significant market-moving news of the week, and most highlighted the alleged settlement between Iran and the United States. Other news items noted included Amazon’s expansion into its Less Than Truckload (LTL) services to all businesses in the US, excitement over the SpaceX IPO, a federal judge on Monday striking down the $100,000 H-1B visa fee imposed by Trump, ruling that the fee constituted an unlawful tax that Congress never authorized, and the ECB raising interest rates. A less-followed but interesting story was Stearns’ aggressive expansion and development in its attempt to be the “Bloomberg of Africa,” which could boost general economic activity in Africa by simply increasing the volume of trades each day and increasing trust in market pricing.
On the Chicago Sports Scene, Stevenson High School graduate Jalen Brunson led the Knicks to the NBA championship! Why Jalen is not a Chicago Bull rather than a Knick is yet another nail in the Bulls’ coffin. He won the IHSA State Championship and the NCAA Championship, and, besides not drafting him, he was available a few years ago when the Dallas Mavericks unloaded him.
This Week
Wall Street heads into a holiday-shortened week (the markets will be closed on Friday for Juneteenth) with investors focused on the war, the Federal Reserve’s June meeting, and fresh consumer spending data.
The Fed will announce its interest rate decision, followed by Chairman Kevin Warsh’s first press conference. Investors will be watching closely for clues on how Warsh plans to navigate persistent inflation pressures.
On the economic data front, the May retail sales report and the Philadelphia Fed manufacturing survey will provide color on economic momentum.
Trading got off to a terrific start Monday morning as Stocks and bonds rallied while oil tumbled to a three-month low after the US and Iran agreed to end their war and reopen the Strait of Hormuz.
Over the weekend, the United States and Iran reached a cease-fire agreement, paving the way for further negotiations aimed at ending a months-long war that has resulted in thousands of casualties and significantly impacted the global economy. Nasdaq 100 futures advanced 1.9%, while those for the S&P 500 rose 1.2%. European stocks climbed 0.7% to shatter a pre-war record high. Brent fell to around $83 a barrel. Gold and Bitcoin gained strongly, while the dollar lost ground against all major currencies.
Deal or no deal? The future remains uncertain, as President Trump and Iranian leaders hold significantly different perspectives on the conflict’s outcome.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.