2 Key Market Events That Could Move Stocks This Month

This month has already been chock-full of important economic and market events. The Space Exploration Technologies (NASDAQ: SPCX) initial public offering (IPO) was the largest ever, but the markets didn't have a significant response to it, at least not yet. The May inflation report just came out with the highest rate of inflation since April 2023, and that didn't move the markets, either. But the latest jobs report two weeks ago, showing strong jobs data, did send the S&P 500 down. That seems counterintuitive, but what the market was really responding to was the fear that a healthy jobs report would push the Federal Reserve to keep interest rates high.

This week could bring bigger swings, though. The next big event is the Federal Reserve's open market committee meeting this week. If the jobs report swayed the market, the Federal Reserve meeting could move it even more. At the end of the week, several exchange-trade funds (ETFs) could start to include SpaceX, which could also get the market moving.

What's on the table for the Federal Reserve meeting?

The Fed sets monetary policy, and it has a mandate to maximize employment while keeping prices steady. As inflation accelerates along with robust employment, it reduces the likelihood the central bank will lower interest rates. High interest rates help stem inflation by making it harder for many people to borrow and spend, which tends to limit the amount of money flowing into the economy. That is meant to lower prices and inflation.

Image source: Official White House Photo by Daniel Torok.

New Fed Chairman Kevin Warsh has his first meeting in his new role this week, and the Fed is expected to announce its decision on interest rates on Wednesday. Considering all of the new information, investors and economists don't expect it to make any interest rate changes. However, the market's response to this might already be priced in since it fell on the jobs report. There's also the chance that the Fed raises rates as inflation surges, which could send the market down further.

Even if rates stay where they are, the market might be waiting to hear the outlook for the meetings scheduled for July, September, October, and December. According to The Wall Street Journal, Warsh has made it clear in the past that he's not into forecasting, which often ends up being wrong. "These forecasts have been abysmal. My dots wouldn't be perfect either, so I wouldn't give them," he reportedly said at a conference last year. He'd prefer that the Fed's decision not to move the markets, and for the central bank to make a decision based on evidence at the time rather than future assumptions that don't pan out.

Could the lack of guidance itself be a talking point and market trigger? Maybe at first, as investors gets used to it. When the decision comes out on Wednesday, investors will find out.

SpaceX will join indexes

Several indexes have changed their rules to fast-track SpaceX inclusion, and that could happen as fast as the end of this week. The FTSE Russell rules make it eligible to join the Russell 1000 potentially five days after the IPO, and ETFs that track it would have to buy shares to reflect the change. Popular ETFs that mirror index include the Vanguard Russell 1000 ETF, the Vanguard Russell 1000 Growth ETF, and the iShares Russell 1000 ETF.

It could get included in the Nasdaq-100 in as few as 15 days, which would be the end of the month. That could get it added to the Invesco QQQ Trust, one of the largest and most highly traded ETFs on the market.

The high volume of SpaceX trading required to include it in these indexes, and the potential trading of the ETFs themselves, could result in a wide market move.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.