Key facts
- US stocks rallied significantly, marking their best day in two months.
- The rally was driven by tech stock rebounds and optimism surrounding potential US-Iran peace talks.
- SpaceX priced its IPO at $135 per share, raising a record $75 billion and valuing the company at $1.77 trillion.
- The European Central Bank raised its policy rate by 25 basis points.
- Oil prices fell to two-month lows, and the US dollar dipped amid hopes for a Middle East diplomatic breakthrough.
US stocks experienced a significant rally, marking their best performance in two months, fueled by a rebound in technology shares and optimism surrounding potential peace talks between the US and Iran. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all posted substantial gains.
Key to the market's upward movement was President Donald Trump's decision to cancel planned strikes against Iran, which led to a dip in oil prices and the US dollar, while global equities surged. SpaceX's historic Initial Public Offering (IPO) also captured market attention, pricing at $135 per share and raising a record $75 billion at a $1.77 trillion valuation, making Elon Musk the world's first trillionaire. The large allocation of shares to retail investors raises questions about potential market volatility.
Adding to the positive sentiment, the European Central Bank (ECB) raised its policy rate by 25 basis points, its first hike in nearly three years, in response to rising price pressures. Meanwhile, the Bank of Japan is expected to increase rates soon, following a jump in wholesale prices. US inflation data showed headline CPI rising 4.2% in May, with core inflation at 2.9%, while producer prices increased sharply to 6.5% annually, largely due to higher energy costs.
Despite the positive market reaction, concerns linger about the broader tech rally's sustainability, especially with a wave of mega-cap IPOs from companies like OpenAI and Anthropic on the horizon, and Super Micro Computer's recent plunge after announcing a $7 billion equity offering. The energy market remains sensitive to developments in the Strait of Hormuz, with US officials reporting rising oil exports through the waterway.