Next week, SpaceX's IPO will debut, and the AI bull market will face a double test.

The highly anticipated SpaceX initial public offering (IPO) will debut next week, potentially rewriting the history of capital markets with a large-scale financing that will serve as a significant test for the U.S. stock market. With the approaching Federal Reserve interest rate decision, the market is closely watching the important inflation data to be released next week, hoping that a easing of inflation pressure will add more chips to the rate cut expectations. Looking back at Friday, strong non-farm payroll data fueled concerns about the hawkish monetary policy of the Federal Reserve, while doubts about AI spending also dampened investor sentiment, leading to a sharp drop of 4.2% in the tech-heavy Nasdaq index, falling over 1100 points, marking its worst performance since the tariff turmoil in April 2025. Apart from stocks, U.S. bonds, oil, gold, and Bitcoin all fell. However, the S&P 500 index has still accumulated an approximately 8% increase since 2026, rebounding about 16% from its year-to-date low at the end of March. Mark Hackett, Chief Market Strategist at Nationwide, stated, "In the past two months, the market has been supported by strong upward momentum, investors' nearly insatiable demand for tech stocks, and a frenzy of purely technical buying pressure, which has almost overwhelmed all other factors." But now the wind is changing abruptly, as stated by Tom Hancock, Fund Manager at GMO, when everything is going well during times of prosperity, but once things turn downward, the situation can become very bad. Some investors have already started preparing for a market correction phase. Besides concerns about overvaluation, escalating tensions in the Middle East and a surge in energy prices could be significant risk factors facing the market. Looking ahead to next week, investors will face key inflation data such as the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI). With the recent strong performance of the non-farm payroll report exceeding expectations, the market is beginning to worry that the Federal Reserve may shift its focus back to curbing inflation rather than supporting economic growth, sparking discussions about another rate hike. Additionally, next week will see the release of quarterly earnings reports from several important tech companies. Despite the sell-off in tech stocks in the latter part of this week, the core drivers of the recent months' rise in U.S. stocks have still been AI and the tech sector. SpaceX in the Spotlight Elon Musk's SpaceX will officially list on the Nasdaq next Friday. The company has set an offering price of $135 per share and plans to raise $75 billion by selling approximately 5.556 billion shares, with an estimated valuation of around $1.77 trillion. The company has an unusually diverse business structure, encompassing areas such as rockets, satellite communications, and AI. Due to Musk's significant personal influence and the company's wide range of businesses, its fair valuation has always been a point of debate in the market. Financial data shows that the company's revenue grew by 33% in 2025, reaching $18.67 billion, but it still had a net loss of $4.94 billion. "One of the largest IPOs in history is coming... I think this is the focus of everyone's attention," said Jason Pride, Director of Investment Strategy and Research at Glenmede. "The question surrounding it is whether it represents new market growth opportunities or signals market bubble." Following SpaceX's listing, the AI industry will see more heavyweight IPOs. This includes leading AI companies such as Anthropic and OpenAI. Anthropic has already secretly submitted an IPO application this week. Matt Wittmer, Portfolio Manager at Allspring Global Investments, stated that the SpaceX IPO is a very important barometer. Because the company is positioned in multiple long-term growth sectors that investors are most interested in, it will be a key reference for the market to gauge the valuation of future growth stocks. CPI Data and Heavy Earnings Reports Await The May Consumer Price Index (CPI) report, set to be released on Wednesday, will show how soaring crude oil and gasoline prices are affecting inflation. Pride noted that one concern is how much the rise in energy prices is being transmitted to the other components of the CPI. "The Federal Reserve will closely watch this data like a hawk, hoping to see that inflation items other than energy and food remain stable and are not affected by the spillover of rising energy prices." Following the surge in energy prices, the probability reflected in the interest rate futures market shows an increasing likelihood that the Federal Reserve will hike rates this year instead of cutting them. At the beginning of the year, investors widely expected the Fed to continue cutting rates in 2026, but now the market's expectations have shifted from "rate-cut trades" to "maintaining high rates for longer, and possibly hiking again," which was a major reason for the steep decline in tech stocks on Friday. If the CPI and PPI exceed expectations, it may trigger further sell-offs in the market. The quarterly earnings reports of tech giants Oracle (after Wednesday's close) and Adobe (after Thursday's close) will also be closely watched. Tech stocks have long dominated the U.S. stock market. With the recent AI boom, the tech sector's market capitalization share of the S&P 500 index has exceeded 39%, reaching a historical high. These earnings reports will test the heat of tech stock trading and whether the enterprise software industry can shake off the pressure brought on earlier this year by concerns about AI substitution. Analysts point out that "more data from various components of the AI value chain will help the market judge how long the current AI bull market can continue." Two Major Central Bank Decisions In Europe, the market focus will be on the European Central Bank meeting, and with the surge in energy prices sparked by the Middle East conflict, the market widely expects the European Central Bank to hike rates next week. "In the absence of conclusive evidence of second-round effects and amid increasing uncertainty, the ECB's rate hike this time is mainly to mitigate the risk of inflation expectations becoming unanchored," analysts at Morgan Stanley said in a report. The Bank of Canada will also announce its rate decision, with expectations to keep rates unchanged at 2.25%. The May inflation rate remained at 2.8%, within the Bank of Canada's target range of 1%-3%. Overview of important events next week: Monday (June 8th): Japan's April trade balance, Eurozone's June Sentix investor confidence index, U.S.'s 1-year inflation expectations by the New York Fed for May Tuesday (June 9th): Germany's April seasonally adjusted industrial output month-on-month, U.S.'s NFIB Small Business Confidence Index for May, U.S.'s ADP Employment Change up to the week ending on May 23rd, U.S.'s April trade balance, U.S.'s May existing home sales annualized, China's May trade balance Wednesday (June 10th): U.S.'s API crude oil inventories up to June 5th, China's May CPI year-on-year, U.S.'s May non-seasonally adjusted CPI year-on-year, U.S.'s May seasonally adjusted CPI month-on-month, U.S.'s May seasonally adjusted core CPI month-on-month, Bank of Canada rate decision up to June 10th, U.S.'s EIA crude oil inventories up to June 5th, U.S.'s EIA Cushing, Oklahoma crude oil inventories up to June 5th, China's May M2 money supply year-on-year Thursday (June 11th): U.S.'s 10-year Treasury bond auction up to June 10th, U.S.'s initial jobless claims up to the week ending on June 6th, U.S.'s May PPI year-on-year, U.S.'s May PPI month-on-month, U.S.'s EIA natural gas inventories up to June 5th, Turkish central bank rate decision, European Central Bank rate decision, OPEC monthly oil market report Friday (June 12th): France's May CPI final month-on-month, U.S.'s 1-year inflation expectations for June preliminary, U.S.'s University of Michigan Consumer Sentiment Index preliminary This article is reproduced from "Finance Link Society," written by Niu Zhanlin; GMTEight Editor: Wang Qiujia.