U.S. stocks closed with gains on Friday as the market digested a high-profile IPO and developments that raised hopes of reduced geopolitical risk. The S&P 500 rose 0.5% to end the session at 7,431.46, the Nasdaq Composite added 0.31% to finish at 25,888.84, and the Dow Jones Industrial Average gained 353.51 points, a 0.7% advance, to close at 51,202.26.
Central to the positive mood was the much-anticipated market debut of Elon Musk’s SpaceX rocket business, which began trading on the Nasdaq under the ticker SPCX. The shares opened at $150, above the $135 initial public offering price, rallied more than 20% intraday and closed up roughly 19% at about $161. The strong reception for SPCX was interpreted by some market participants as a sign that investor appetite for high-profile listings and growth-oriented assets remains robust, lending support to broader equity sentiment.
Over the weekend, U.S. and Iranian officials announced they had agreed to a deal intended to end the war, a development that contributed to a more optimistic tone among investors. Market participants took the combination of a successful large IPO and improved geopolitical prospects as near-term tailwinds for risk assets.
Focus turns to the Fed
Looking ahead, the Federal Open Market Committee meets Tuesday and Wednesday, and that event is set to dominate market attention. This will be the first policy meeting conducted under Fed Chair Kevin Warsh. Given the recent public disagreements between President Donald Trump and the Fed’s previous chair over the pace of rate cuts, market participants are watching closely to parse Warsh’s priorities and any hints about how he may reshape the institution’s approach.
Market pricing currently implies the Fed will hold policy steady at this meeting, but futures markets, based on LSEG data, are assigning some probability to at least one rate hike before the end of the year. That probability has been influenced by fresh data showing consumer inflation for May rose at its fastest rate in three years, and by signs of a resilient labor market. Investors and strategists see that combination as one that could tilt policymakers toward tighter settings rather than easing.
Any additional rate increases would push borrowing costs higher for households and businesses and tend to make fixed-income instruments relatively more attractive compared with equities. Traders will be parsing the Fed’s policy statement, the updated economic forecasts that accompany it, and Warsh’s press conference following the meeting for indications of how quickly the central bank might move.
Analyst perspectives on current market dynamics
Major Wall Street firms offered differing framings of the market’s recent action and what may lie ahead.
- RBC Capital Markets argued that current valuations are not an obstacle to a rally but cautioned there is limited room before prior highs are retested. Their assessment noted that the S&P 500 avoided a deeper washout to 2025 lows because near-term and forward price-to-earnings multiples did not materially break below long-term averages. They concluded that excess froth in large-cap names appeared to be removed at the March 30 low, creating room for multiples to recover as macro and geopolitical risk receded, but they did not view valuations alone as a sufficient reason to buy.
- Morgan Stanley described the recent correction in equities as primarily the result of a slowdown in the rate of change in earnings revisions and liquidity conditions. They indicated that this digestion could continue in the near term but could also support their view that market leadership might broaden, with relative earnings revisions improving in sectors such as Consumer Discretionary, Transports and Regional Banks.
- JPMorgan suggested that the group of major technology and growth stocks - often referred to as the market’s leading names - may still show further upside, characterizing recent volatility in that space as related to positioning, technical factors and some IPO-related concerns rather than a fundamental shift. JPMorgan noted that while they view the recent weakness as a buying opportunity for that group, additional drawdowns are possible given extreme concentration, and they expect market breadth to improve in the second half of the year.
- Evercore ISI drew a parallel between the SPCX IPO and earlier landmark listings, saying that a high-profile debut could catalyze what they called a “Dream Big FOMO” and help fuel the next leg of a bull market. They observed that large IPOs have tended to lift the broader index in the near term, though returns can be below average further out as cycles mature.
- HSBC pushed back against narratives that suggested lingering investor fear about rate-driven selling or IPO indigestion. Their sentiment and positioning framework was not signaling warning signs, they said, and they remained overweight equities with a preference for stocks over credit. HSBC continued to favor broadening within equities and saw U.S. rates-sensitive cyclical industries among potential beneficiaries.
Market backdrop and implications
Year-to-date, the S&P 500 has risen more than 8% and the Nasdaq has gained over 11%, measures that reflect a market that has recovered from earlier weakness. The strong SPCX debut and the tentative diplomatic development both acted as catalysts for Friday’s rally, but the policy outlook from the Fed remains the principal determinant of medium-term market direction.
Investors will be watching not only for any explicit signal of additional hikes but also for subtle changes in tone within the Fed’s statement and projections that could indicate a more hawkish or dovish bias. The persistence of inflationary pressures and the resilience of employment data are the twin forces most likely to shape that bias in the near term.
Bottom line
Stocks entered the week on a firmer footing following a high-profile IPO and signs of reduced geopolitical tension, but the path ahead is contingent on the Fed’s interpretation of recent inflation and labor market data. With futures markets still assigning some probability to at least one hike before year-end, investors will be closely parsing the Fed’s decisions and commentary for signals that could influence sectors differently, including growth-oriented technology names, rates-sensitive cyclical industries and financials.