What’s News in Markets: SpaceX’s Rocky Flight, Oil Slides, Fed Fallout

SPEAKER_1 (0:00)

AI was supposed to take over the parts of the job you hate.

Turns out, it made your job even harder. Instead of doing the work, it gave you homework. ServiceNow's AI specialists get work done, from start to finish. Cases get resolved, loops get closed. With ServiceNow, you can do the parts of your job you're best at, and delegate the rest. To put AI to work for people, visit servicenow.com.

Imani Moise (0:32)

Hey, listeners, it's Saturday, June 20th. I'm Imani Moise for The Wall Street Journal. And this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's dive in. It was a short week for markets due to the Juneteenth holiday, but there was no shortage of market moving headlines. Investors cheered the strongest sign yet that the US and Iran are moving closer to a lasting peace deal. They also got a reality check from the new chair of the Federal Reserve, who made it clear that he wants a less predictable and less talkative central bank. And in the background, the AI-fueled rally that has powered markets for much of this year showed no sign of slowing. Overall, markets ended higher. The tech-heavy Nasdaq led the way, gaining nearly 2.5 percent for the week. The S&P 500 added 0.9 percent, while the Dow rose 0.7 percent.

The peace deal between the US and Iran means that the Strait of Hormuz, a crucial global highway for oil, will be coming back online. But that's not necessarily good news for oil stocks. The International Energy Agency warned that oil production could eventually outpace demand growth if the peace deal holds, raising the possibility of an oil glut next year. That would mean lower prices and potentially lower profit for oil companies. Energy was the worst-performing sector in the S&P 500 this week, but sliding almost 7 percent as investors' unwound bets tied to conflict in the Middle East and began pricing in a potential surge in supply. Brunch crude futures finished the week about 9 percent lower, at around $79 a barrel, just a few dollars above their pre-war level. But oil companies are still in a better place than they were before the war began. Even after this week's decline, the S&P Energy Index is still up about 21 percent for the year.

President Trump's pick to lead the Federal Reserve hosted his first meeting on Wednesday, and investors didn't like what they heard. The central bank left interest rates unchanged, as expected. But policymakers signaled that their next move could be a rate hike, instead of a cut. Markets started out the year expecting lower borrowing costs. Instead, nine out of 19 Fed officials now expect at least one rate increase before year end, because inflation remains stubbornly high and the economy continues to run hotter than expected. For context, zero officials expected a hike back in March, and just one is now predicting a cut, down from 12

In his comments on Wednesday, the new Fed chairman, Kevin Warsh, repeatedly emphasized the Fed's commitment to bringing inflation back down to its 2% target, even as President Trump has pushed for lower rates. The yield on the two-year Treasury note climbed roughly 10 basis points this week, hitting its highest level in more than a year, as traders adjusted to the possibility that interest rates could stay higher for longer.

And after its meteoric rise following its historic IPO, it's looking like SpaceX may be coming back to Earth. It's common for stocks to surge on their first day of trading and then lose steam. And after soaring earlier this week, shares of Elon Musk's rocket and satellite company pulled back on Wednesday and Thursday. Despite that, SpaceX remains roughly 37% above its $135 offering price and is still one of the strongest IPO debuts in recent memory. The rally briefly pushed SpaceX past Amazon to become the world's fifth largest public company by market value.

Analysts say investors should brace for a continued volatility as the stock settles into a more normal trading pattern and buyers and sellers search for a fair value. And traders are making increasingly aggressive bets on where the stock will go next. Tuesday marked the first day they could trade options tied to SpaceX. And roughly 1.8 million contracts changed hands, shattering the first day record previously set by Meta in 2012

And now you know what's news in markets this week. You could read about more stocks that moved on the week's news in our live markets coverage on wsj.com. Today's show was produced by Danny Lewis with deputy editor Chris Zinsley. I'm Imani Moise. Have a great weekend and catch you next Saturday.