What drove the stock market last week — before and after SpaceX’s historic IPO
Wall Street took a breather Friday after SpaceX made its record-breaking debut. The success ended a week of concern about whether the market had the appetite to absorb the largest IPO in history. SpaceX rose 19% to close at nearly $161 per share, making it the sixth-largest publicly traded company in the United States, with a market value of more than $2.1 trillion. The stock opened at $150, above the fixed bid price of $135. The artificial intelligence and rocket company has raised $75 billion, making CEO Elon Musk the world’s first trillionaire. Hours before SpaceX began trading, Jim Cramer said the first signs of demand for the IPO looked promising; This has eased some fears in the market about whether banks will continue their downtrend and what the Club has been protecting against all week by selling incrementally to boost our cash. “We’re over the hump,” Jim said during Friday’s Morning Meeting. While we braced for the worst, SpaceX’s debut actually caused shares to rise on Friday. Signals of a possible US-Iran peace deal certainly helped in the short term. The S&P 500 rose 0.5%, bringing its weekly gain to almost 0.7%. Nasdaq rose 0.3% on Friday and finished the week up 0.7%. Friday’s rally supported Thursday’s big comeback, following Wednesday’s double. Here’s a closer look at what drove the market last week, including our growing cash pile, the massive supply deal between Corning and Amazon, and the inflation setup ahead of the Federal Reserve’s interest rate meeting next week. Our cash pile has grown In the run-up to SpaceX’s debut, Jim warned that large IPOs could be headwinds for the stock market. Excessive equity supply can lead investors to sell their existing holdings to raise cash and buy shares in a hot bid. We saw some of this as the week progressed. The next two major IPOs are OpenAI, which filed IPO documents last Monday, and Anthropic, which filed IPO documents earlier this month. “We want deals to be under control because otherwise it could be disastrous,” Jim said on Thursday’s “Mad Money.” It was concerns like these that led us to reduce some of our positions last week. Our theory: Raise more cash in the event of a crisis and hedge against volatility caused by SpaceX. We sold Goldman Sachs and Qnity on Monday, Arm on Tuesday, and Eaton and Cardinal Health on Wednesday. Our cash position stands at 12% above normal, giving us plenty of dry strength to start buying. AI bets continued Corning announced Monday that Amazon will pay billions of dollars for its optical fiber in the coming years to grow its data center presence. Optics are increasingly replacing copper because they are faster and burn less energy; This is the factor that limits computing power. The deal is a boon for Corning’s optical communications division, which produces the networking solutions and fiber optic cabling needed for data center development. This is just one of many deals Corning has signed, including Nvidia last month and Meta Platforms in January. A few sessions later, Oracle also had a lot of positive things to say about the demand for AI computing. The enterprise technology company announced during earnings that it plans to raise an additional $20 billion to fund the creation of AI infrastructure. The most important thing for us is that the money does not go to hopes and dreams. Oracle has proven that financing is not a case of “if you build it, they will come.” It’s a “They’re already here, so the faster you build it, the faster you’ll sell it” story. The funding raise overshadowed Oracle’s better-than-expected results, causing shares to fall nearly 9% on Thursday. It’s a bad week for Oracle shareholders, but a good week for some of our AI-related plays. Intel was our top performer, with weekly gains of over 25%. Bank of America’s double upgrade from sell to call on Thursday was good for most of the earnings. Arm Holdings, a rocket ship, ranked No. 2 for the week, up 11%. Nvidia was flat last week, while Broadcom lost less than 1%. Apple shares tumbled more than 5% in the week after the company announced its new AI-powered Siri, powered by Google Gemini, at its annual developers conference on Monday. Apple was near record highs heading into the event. Inflation – hot or not? Outside of AI trading, the market debated the implications of inflation data, which looks hotter than expected, on the Fed’s upcoming policy meeting. May’s consumer price index, a broad measure of the cost of goods and services in the economy, recorded its highest value in three years. Of course, this isn’t great. But Jim said he liked the numbers and argued that the 4.2 percent annual increase mostly reflected high oil prices caused by the Iran war. “The outliers are all linked to Iran in one way or another. But when I look at it, I say, ‘Well, when this war is over in two or three days… then I think you’re going to look pretty good,'” he added. Investors on Friday largely expected the central bank to keep its benchmark interest rate steady when the decision is announced on June 17. This will be the first meeting with President Donald Trump’s pick, Fed chairman Kevin Warsh. Trump has made no secret that he wants rates lowered. However, after he nominated Warsh in January, the discussion in the market shifted from the possibility of a rate cut to the possibility of an interest rate increase. We’ll see how Warsh threads that needle next week. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) 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