The Dow Just Hit Five Straight Records, But the Tech Selloff and SpaceX Lockup Tell a Different Story

A busy week here on Wall Street. The Dow just logged its fifth straight record close even as tech stumbled and the Nasdaq slipped. Asia also saw a rough tech-led selloff. Gold is climbing on weak jobs data and hopes for a Middle East de-escalation. And SpaceX's first share lockup expires today after a brutal down week for the stock. Joining me to break it all down is Michael Reinking, strategist at the New York Stock Exchange. Mike, thanks so much for being here. Iran is denying direct talks with Washington even as Trump says the deal is coming with Oman brokering behind the scenes. What should markets read from these mixed signals on the Strait of Hormuz?
Thanks for having me back. I think it is pretty clear that the administration is once again trying to find an off-ramp. But there is not a clear endgame here. This is something we are going to be talking about weeks from now — and more likely months from now. What oil prices are telling you is that something is going on. We have seen prices pull back quite significantly — ICE Brent is trading right around $80 a barrel, pretty significantly down from the highs just a couple of weeks ago. That is having broader implications within markets, helping to ease some of the inflation concerns and allowing Treasury yields to pull back after they were breaking to fresh highs last week. But unfortunately I do not think this situation is going away quickly. If we do get some sort of deal — and I think it will be short-term — we will see how long it is before kinetic activity flares back up again.
The Dow just hit its fifth straight record close. What is driving the strength?
Markets broadly are trading very well. The biggest driver is earnings. If you look at even just the outperformance yesterday, you had a couple of single stocks driving strength in that index — Amgen and Nvidia, which came on the back of the SpaceX earnings where SpaceX said they would continue to use Nvidia's chips and hardware rather than spreading that to AMD and others. You had that exclusivity with Nvidia. We also had a clearing event within the tech sector late last week — an unwind and deleveraging. From there we have been continuing to see broad-based strength, and that really comes from the earnings backdrop, which has been very, very strong.
SpaceX — big talk of the week. The stock lockup expires today. After a rough week, what should we expect?
It is pretty unprecedented. We are not exactly sure what to expect. Short positions had built up pretty significantly in anticipation of this clearing event. We saw a little bit of short covering going into earnings — the stock traded from around $110 to $125. Then post-earnings, right back down to the $110 area. We are going to have to see how much supply actually comes to market and how aggressively it comes. This is something we have not seen before in terms of size and how close to the recent IPO this lockup has come. But it is pretty well known and people have positioned for it in advance, so we may not necessarily see as big a move lower as some might be expecting.
Tomorrow's jobs report will be out. What is the market actually watching?
Given the commentary — or lack thereof — from the Federal Reserve at last week's meeting, markets are going to very much focus on economic data going forward. Yesterday we had a slightly weaker ADP number. The labour market in general has remained pretty resilient, so I would not expect a big surprise on jobs. The real key from here is going to be the inflation data, which comes out next week. We are going to see CPI next week, and then you have a couple of months between now and September for markets to really figure out what the Fed's next move is.
Mike, thanks so much for joining us.
Thanks for having me. See you next week.