Wall Street rout deepens 2% as SpaceX IPO and inflation test loom

Wall Street suffered its worst session in months as a $75 billion SpaceX IPO and a crucial inflation print set up a defining week for equity markets.

The S&P 500 fell more than 2% to its lowest close since April, with the selloff accelerating into the final hour as traders repositioned for the week's twin catalysts. The Dow Jones Industrial Average dropped more than 800 points, while the Nasdaq Composite slid 2.5%, dragged lower by megacap technology shares.

"The market is pricing in a binary outcome — either inflation cooperates or the Fed's last-hawk-standing posture gets reinforced," said Sarah Lin, equity strategist at Edgen. "Adding a $75 billion IPO on top of that creates a liquidity event that amplifies every move."

All 11 S&P 500 sectors finished in negative territory, with consumer discretionary and information technology falling more than 3% each. Energy and utilities held up relatively well, declining less than 1%. Trading volume surged to 25% above the 20-day average as institutional investors reshuffled portfolios ahead of the SpaceX listing.

The selloff sets up a critical juncture for equity markets. Wednesday's consumer price index release will test whether the Fed's patient stance on rate cuts is justified, while Thursday's SpaceX IPO — the largest in history at $75 billion — threatens to divert capital from existing positions. The Cboe Volatility Index jumped to 22, its highest in three months, signaling options traders expect more turbulence ahead.

Inflation Data Holds the Key

Economists expect May CPI to show headline inflation easing to 3.3% from 3.4%, but core measures are forecast to remain sticky above 3%. A hotter-than-expected print would all but extinguish hopes for a September rate cut, futures pricing suggests. The 10-year Treasury yield rose 8 basis points to 4.42% on Friday, reflecting the growing anxiety.

SpaceX IPO Adds to Market Complexity

SpaceX's record-breaking IPO, set to price at $135 per share on June 11 and begin trading June 12 under the ticker SPCX, has already drawn $150 billion in orders — double the offering size, according to Reuters. The deal represents the first major test for public markets after years of muted IPO activity, with Wedbush analyst Dan Ives calling it a "paving the way" moment for AI giants Anthropic and OpenAI to follow. The offering's scale — representing 4.2% of SpaceX's float — creates a gravitational pull on growth-oriented capital that could persist through the listing week.

The dollar strengthened 0.3% against a basket of major currencies, adding pressure on multinational earnings. Gold slipped 0.8% to $2,340 an ounce as the rate-sensitive metal faced headwinds from rising real yields.

This article is for informational purposes only and does not constitute investment advice.