Elon Musk Sets the SpaceX IPO Price: 8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a mixed market open later on Wednesday morning.

1. Stock futures edged lower early Wednesday as Brent crude prices climbed around 2.5% following fresh strikes between the two sides in the Middle East. Dow Jones Industrial Average futures were down 0.4%, S&P 500 futures were down 0.1% and Nasdaq futures were up 0.2%. The S&P 500 rose for a ninth consecutive day Tuesday, if the index extends its streak to 10 days it will be the longest winning run since 1995. All three main indexes closed at record highs together for a fifth straight day–six in a row has only happened once before, in 1992. (Barron’s)

While we are all for the stock market breaking records, the risk management side of our brain recognizes the deeper overbought condition in both the S&P 500 and Nasdaq Composite following Tuesday’s added climb. While some may be tempted by FOMO, we’ll remain disciplined in actions to put capital to work but also capitalize on opportunities to monetize portfolio profits like we did on Tuesday when we booked a 400% gain on some shares of Marvell (MRVL).

Another reason we are treading cautiously near-term is renewed uncertainty for U.S.-Iran peace talks and the fragile ceasefire:

2. Gulf hostilities flared again on Wednesday as an Iranian missile attack damaged Kuwait’s airport and the U.S. military carried out strikes near the Strait of Hormuz, with diplomacy ‌between Washington and Tehran showing little sign of progress. The attacks are the latest to test a shaky ceasefire, sending oil prices up more than 2%, as the strait remains largely closed more than three months after initial U.S. and Israeli strikes on Iran. (Reuters)

President Donald Trump is demanding that Tehran put specific nuclear concessions down in writing as part of a preliminary agreement aimed at pushing past the drawn-out deadlock between the U.S. and Iran, U.S. officials and another source familiar with the matter tell ABC News. Iranian negotiators previously gave verbal assurances that the regime would ultimately agree to certain terms related to Iran’s nuclear program (ABC News)

3. The Trump administration is proposing that tariffs of 10% or more be imposed on products from dozens of major trading partners following a probe into imports of goods allegedly made with forced labor. The report released early Wednesday by the U.S. Trade Representative said Canada, Mexico, Taiwan and the United Kingdom and some other countries and territories would face 10% additional tariffs for allegedly failing to enforce a forced labor import ban. A 12.5% additional tariff would be imposed on China, Japan, India, South Korea, Brazil and Switzerland and dozens of other countries. (AP News)

Our initial take is that those proposed tariffs would be another tailwind for current inflation pressures, but as we’ve seen over the last year such announcements run the possibility of being a negotiating tactic. With Treasury Secretary Scott Bessent set to testify on Wednesday before the Senate Finance Committee, we’ll look for more details on the above, the move to refund past tariffs, and other insights on fiscal policy as well as U.S. – Iran peace talks.

As we weight Bessent’s words, we’ll be thumbing through today’s May Service PMI report from ISM as well as ADP’s take on private sector job creation in May.

4. Palo Alto Networks reported strong third-quarter earnings results on Tuesday afternoon, beating estimates for every major metric. Amid skepticism about artificial-intelligence disruption of software companies, the results reinforce the argument Palo Alto and its peers have made: AI creates more work for cybersecurity firms, not less… AI brings a host of new security issues to enterprise networks. AI enables traditional cyberattacks to be carried out at greater scale and speed, and networks need to be hardened to address the threat. But the bigger issue may be AI agents, software that can use AI models to accomplish a complex series of tasks from simple conversational commands. (Barron’s)

We always like it when a company management team reaffirms our investment thesis for a position in the Pro Portfolio. We continue to favor the diverse exposure granted by the First Trust Nasdaq Cybersecurity ETF (CIBR), and we are due to revisit our price target once we’ve assembled respective backlog and guidance from Palo Alto Networks (PANW) and other top holdings. However, with a relative strength index (RSI) over 84, we would not encourage members to be adding shares at current levels.

5. Microsoft on Tuesday announced a sweeping slate of AI initiatives, from autonomous workplace assistants and gadgets to Nvidia-powered PCs and a new in-house reasoning model, in a push to move beyond apps and remake computing around AI. At its ‌annual software developer conference, Microsoft Build in San Francisco, executives showcased a broader shift in company strategy, as it pushes to replace the traditional model of navigating software with one in which AI agents carry out complex tasks autonomously. By pairing those agents with new devices, powerful PCs and its own models, Microsoft is trying to control more of the end-to-end AI system — called a stack — and lock in enterprise customers, as competition from rivals OpenAI and Anthropic intensifies. (Reuters)

Following comments earlier this week from Nvidia (NVDA) CEO Jensen Huang, the announcement of Microsoft’s (MSFT) new computer called the Surface RTX Spark Dev Box that is loaded with Nvidia’s new RTX Spark PC chip that will bring AI directly to PCs wasn’t much of a surprise, given the back-to-back timing. While that reaffirms the market opportunity for Nvidia, we found the timing for Microsoft sharing plans to introduce a new AI agent called Scout within its Copilot software that can carry out tasks such as gathering emails or messages that require decisions by the user to move forward far more interesting. Next week, Apple (AAPL) is expected to showcase its revamped, AI-enabled Siri and Microsoft’s move gives us another offering to benchmark it.

6. In a surprise move ahead of its investor roadshow, Elon Musk’s SpaceX plans to fix its IPO price at $135 per share to raise a record-setting $75 billion, according to a source familiar with the matter. The rocket and satellite communications company plans to sell 555.6 million shares, the source said. It is aiming for a valuation of $1.75 trillion, two other people said. (Reuters)

With the IPO road show set to kick off, an event that gauges institutional investor interest in the IPO offering and helps inform price talk, Musk’s move is rather unusual. Musk has rewritten the IPO playbook for SpaceX in many other ways, from planning to give retail investors a larger role in allocations, as much as 30%, to pushing for early index inclusion, and structuring governance to preserve strong founder control. Odds are that Musk is also responding to the note published on Tuesday by Morningstar that placed a $780 billion price tag on SpaceX, 48% below its current private-market valuation.

7. Economic data today per TipRanks: MBA Mortgage Applications Index (Weekly), ADP Employment Change Report (May), S&P Global Final Services PMI (May), ISM Non-Manufacturing PMI (May), Business Inventories (April), Factory Orders (April), EIA Crude Oil Inventories (Weekly), Fed Beige Book

8. Companies reporting today per TipRanks: AM – Macy’s (M), Ollie’s Bargain Outlet (OLLI) . PM – Broadcom (AVGO), CrowdStrike (CRWD), Five Below (FIVE), Petco Health & Wellness (WOOF), PVH (PVH)

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At the time of publication, TheStreet Pro Portfolio was long AAPL, AVGO, CIBR, MSFT, NVDA.