Tech Stocks Stumble as Market Braces for Record SpaceX IPO

Markets Sell Off Amid Unprecedented Share Supply

Despite receiving the inflation data they had hoped for, investors sent markets sharply lower in the last session. The S&P 500 has fallen more than 3.3% over the past five days, dropping 1.62% on Wednesday alone. The Dow Jones fell by 1.87%, and the technology-focused Nasdaq slid 1.98%. However, pre-market futures suggest an attempted rebound, with technology shares leading the way.

The initial decline wasn't driven by immediate economic panic. The latest Consumer Price Index (CPI) showed that core inflation, which removes volatile food and energy costs, rose by a manageable 0.2%. Instead, the market is facing a reality check as several risks mount, from geopolitical tensions to questions over the future of the AI trade.

The Real Culprit: A Flood of New Shares

The primary cause for the sell-off was a massive supply of new technology shares hitting the market. A combination of new stock sales and initial public offerings (IPOs) from major companies is forcing investors to find buyers for nearly $190 billion in a single month. This includes:

• SpaceX: A record-breaking $75 billion IPO.
• Alphabet: An approximately $85 billion capital raise.
• Oracle: A new $20 billion funding plan.
• Super Micro: A $7 billion share sale.

This deluge of new stock is testing the market's capacity to absorb it all at once, leading investors to sell other holdings to free up cash. Adding to the pressure, Amazon's expansion of its freight business put a dent in industrial and transport stocks.

The SpaceX IPO: A Historic Market Event

Elon Musk's SpaceX is set to launch the largest IPO in history, with its shares beginning to trade on Friday under the ticker SPCX. The company is raising $75 billion by offering over 555 million shares at $135 each, placing its total valuation at an astronomical $1.8 trillion.

Demand has been immense, with orders reportedly running at four times the number of available shares. This means the vast majority of interested investors will not receive an allocation.

Bull vs. Bear: Hopes, Dreams, and Scepticism

While interest is high, signs of caution are emerging. On unregulated pre-IPO exchanges, the price for SpaceX contracts has fallen from around $210 to $157. This suggests the initial jump in share price on the first day of trading—often called the "pop"—might be more modest than early excitement indicated.

Prominent short-seller Jim Chanos added to the scepticism, labelling the company's near-$2 trillion valuation as based on "hopes and dreams" for a business that has yet to turn a profit. In contrast, analysts at New Street Research have initiated coverage with a $165 price target, about 22% above the IPO price, projecting that revenues could hit $195 billion by 2030 and valuing the company at a potential $2.3 trillion.

Regulatory Scrutiny Mounts

Just before its public debut, the IPO has hit a political obstacle. US Senator Elizabeth Warren has formally called on regulators to delay the company's listing. She raised concerns about its valuation and corporate governance, particularly regarding the recent acquisition of xAI, another Musk-led company. The senator warned of potentially "inaccurate or misleading" accounting and pointed to what she termed Musk's "uniquely unchecked" power as the majority shareholder.

Local and Market-Wide Impact

The IPO is expected to create around 4,000 new millionaires, many of whom are located near the company's base in Brownsville, Texas. This sudden influx of wealth is predicted to have a significant impact on the local property market, which is currently one of the most affordable in the US. More broadly, some analysts believe the immense capital being drawn towards SpaceX has contributed to recent weakness in other markets.

Company-Specific Movers

Oracle's Costly AI Ambition

Oracle saw its shares fall 6% despite reporting record quarterly revenue of $19.2 billion. The company beat Wall Street expectations, but simultaneously announced huge spending plans to build out its artificial intelligence infrastructure. This has spooked investors who are concerned about the escalating costs of the AI arms race. The company announced it plans to raise an additional $20 billion in equity and debt, putting its stock at risk of turning negative for the year and trailing the S&P 500's broader gains.

• Cloud Growth: Its cloud infrastructure division, which rents out AI servers, was a standout performer, with sales jumping 93% to $5.8 billion.
• Massive Spending: However, the company projected capital expenditures of $70 billion for fiscal year 2027, with customers paying another $20-$25 billion directly. It also plans to raise an additional $40 billion.
• Investor Concern: This heavy investment, including a single multi-year contract with OpenAI that makes up half its backlog, highlights the huge costs and risks of competing in the AI infrastructure sector.

Palantir Chief Criticises AI Labs

Alex Karp, the CEO of data analytics firm Palantir, has taken a swipe at major AI research labs. He claims that corporate customers are "unhappy" with the big players, believing they don't understand their business needs. Karp accused them of "tokenmaxxing" – essentially, a practice of burning through AI processing credits simply to appear productive, rather than solving real-world problems. He also claimed that most public projects from AI leader Anthropic are already "running on Palantir."

Robinhood's Strategic Win

In a sea of red, trading platform Robinhood stood out, with its shares climbing 3%. The rise was fuelled by news that the company has received approval to act as an underwriter for IPOs, a significant step up from simply offering shares to its users. This development, coupled with strong May performance figures showing a 48% annual increase in platform assets to $377 billion, signals a maturing business model.

Frasers Group Bids for Hugo Boss

A notable development in European retail saw the UK's Frasers Group launch a €2 billion takeover bid for the German premium brand Hugo Boss. The offer of €38 per share represented a 4% premium on the last closing price. The board of Hugo Boss has stated it will review the proposal, a move that highlights ongoing consolidation in the luxury goods sector.

Nvidia Deepens Robotics Push

Continuing the theme of major technology investment, Nvidia has invested in Neura Robotics' latest funding round. The move, which values the German start-up at around $7 billion, underscores Nvidia's expanding ambition in the robotics and automation space. This sector has seen a surge in funding, attracting nearly $56 billion in 2026 alone.

ERock: A New Way to Play the AI Power Boom

While SpaceX dominated headlines, a new power company called ERock also debuted. The firm makes natural gas generators for data centres and other large industrial customers. It raised $600 million but its shares fell 13% on their first day amidst the broad market sell-off. ERock's equipment provides backup or temporary power for energy-hungry data centres, a growing need as waiting times to connect to the main grid can take years. Despite a lofty valuation, the company holds a backlog worth $1.3 billion as of March.

Central Banks and Inflation: A Diverging Path

ECB Signals First Rate Hike in Years

The European Central Bank (ECB) is poised to raise interest rates for the first time in nearly three years, with markets widely expecting a 0.25% (25 basis point) hike. The central bank is under increasing pressure to tackle rising inflation, which has been aggravated by higher energy costs linked to the conflict in Iran. Eurozone headline inflation hit 3.2% in April, with a core inflation figure of 2.5% driven by the services sector.

US Inflation Could Keep Fed on 'Prolonged Hold'

In the US, the latest data showed consumer price inflation (CPI) hitting an annual rate of 4.2% in May. While this could mark a peak, it may also convince the Federal Reserve to keep interest rates on a "prolonged hold" for most of the year. President Trump has brushed off the data, stating "I love the inflation" and that it would "come down like a rock" after the Iran war ends. Investors will now look to the upcoming producer price index (PPI) for further clues on wholesale inflation.

Key details from the US data include:

• Core Inflation Slowing: The core inflation rate, which policymakers watch closely, increased by just 0.2% in May, a slower pace than in April.
• Rate Hikes Unlikely: Following the data, the probability of the Fed raising rates in its next two meetings dropped below 2%.
• Persistent Risk: However, economists warn that inflation is still far above the Fed's 2% target, and risks of a secondary bump in prices over the summer remain, especially with ongoing supply chain issues.

This gap between business and consumer inflation indicates that companies are absorbing rising costs, which squeezes their profit margins and could signal future earnings problems.

Geopolitics, Commodities, and Global Flows

Oil Prices Ease Despite Escalating Middle East Tensions

Tensions in the Middle East have intensified, with the US military conducting fresh strikes in Iran and Tehran reportedly retaliating with strikes on US targets in Kuwait and Bahrain. President Trump stated the US would be attacking "very hard," which contributed to Wednesday's market drop.

However, in a surprising turn, oil prices eased after an initial spike. This suggests markets may be pricing in a quick end to the conflict or believe a rumoured secret movement of oil barrels through the Strait of Hormuz will maintain supply. The situation remains volatile, as energy stockpiles are thin, with US crude inventories falling for seven consecutive weeks.

Foreign Investors Retreat from Emerging Market Stocks

Data shows that foreign investors pulled a net $37 billion from emerging market equities in May. The sell-off was heavily concentrated in South Korea's technology-focused market, which saw outflows of $27.9 billion. This suggests investors are reducing their exposure to the global chip and AI trade rather than making a broad negative call on all emerging economies. In contrast, emerging market bonds still attracted over $10 billion in new investment.

The World Cup Economy: Finding Opportunity Beyond the Pitch

The 2026 FIFA World Cup, hosted across North America, is set to be a major economic event, creating specific investment themes for the duration of the tournament.

Betting Markets Expect Record Activity

The tournament is forecast to become the largest single betting event in history, with global wagers projected to exceed $50 billion. In the US, key beneficiaries are expected to be market leaders like Flutter and DraftKings. In a related move, crypto exchange Kraken has been named an official supporter of the tournament, gaining brand exposure to a projected global audience of over six billion.

A Boost for Broadcasters and Brands

Media giants Fox and Comcast's Telemundo are anticipating record advertising revenue from the 104 matches. For consumer brands, official sponsors like Anheuser-Busch InBev, Coca-Cola, and Visa are positioned to benefit from global viewership, while sportswear firms Nike and Adidas expect a 3-4% lift in sales from merchandise.

Hospitality and Travel See a Surge

While leisure tourism forecasts appear soft, corporate travel to host cities has boomed. Business travel in the US is up nearly 50%, with hotel prices jumping 30%. This trend is expected to benefit full-service hotel groups like Host Hotels and Ryman Hospitality, as well as the alternative accommodation provider Airbnb.

Historical Precedent: A Word of Caution

While the event provides clear commercial opportunities, broader market history suggests caution. Research shows that national stock markets often fall after their team is eliminated, as negative sentiment can influence investor behaviour. During the 2022 tournament, for example, the S&P 500 fell over 5% during the knockout stages.

Key Developments in Digital and Financial Markets

Visa and Mastercard Reach Landmark Settlement

A US federal judge has given preliminary approval to a $38 billion settlement between Visa, Mastercard, and millions of merchants, resolving a legal dispute over 'swipe fees' that began in 2005. The agreement will see the payment giants cut certain fees and, more importantly, weaken the "Honor All Cards" rule. This change will allow merchants to refuse entire tiers of cards (like premium rewards cards), giving them more leverage over the fees they pay.

Bitcoin ETFs See Assets Decline

Assets held in the 11 US spot Bitcoin ETFs have fallen to $77.6 billion, their lowest level since the 2024 US election. The figure is down sharply from a peak of over $169 billion in October 2025, reflecting a significant cooling in institutional and retail demand for crypto exposure through these products.

Mastercard Pushes Into Automated Payments

Mastercard has launched a new service, Agent Pay for Machines, designed to manage high-frequency, low-value payments between AI agents and machines. With partners including Coinbase, Stripe, and Polygon, the system aims to build the financial plumbing for a future where autonomous AI agents can purchase services like web domains or pay logistics fees without human intervention.

Shifting Tides in Entertainment

Two recent low-budget horror films, Obsession and Backrooms, directed by young viral YouTube creators, are outperforming big-budget franchise movies at the box office. Their combined global ticket sales have topped $445 million. This trend suggests audiences are hungry for imaginative and original storytelling over tired sequels, and could benefit cinema operators like Cinemark Holdings, which stand to gain from higher footfall driven by sleeper hits.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).