Morning Bid: Equity supply shock?

• Anthropic's IPO filing values it at $965 billion, above OpenAI's valuation, while SpaceX plans a $75 billion offering at $1.75 trillion valuation, marking a potential 'equity supply shock'
• Alphabet's stock fell 2% after hours following its $80 billion equity raise announcement, signaling possible investor indigestion at sky-high valuations
• The ISM manufacturing survey showed factory activity at four-year highs but elevated input prices, while euro zone inflation accelerated to 3.2% in May, raising concerns about AI investment fueling inflation alongside energy price pressures from U.S.-Iran tensions

Market Summary: Equity Supply Shock Concerns

Key Developments

Major Equity Raises:

• Alphabet announced $80 billion in equity financing, including a $10 billion private placement with Berkshire Hathaway, causing shares to fall 2% after hours
• AI startup Anthropic confidentially filed for IPO, achieving a $965 billion valuation (exceeding OpenAI's)
• SpaceX planning $75 billion IPO at $1.75 trillion valuation

Market Implications

Analysts warn that massive equity offerings from tech giants at elevated valuations may test market appetite, with historical IPO waves often marking peaks of speculative frenzies. The shift from debt to equity financing among hyperscalers represents a notable change in capital-raising strategy.

AI Sector Performance

• S&P 500 software sector posted strongest monthly gain since October 2002 in May
• European semiconductor STMicroelectronics surged 10% to 24-year highs after raising data-center revenue forecast to $1 billion
• AI buildout raising inflation concerns alongside energy pressures

Economic Indicators

• ISM manufacturing index hit four-year high in May, though potentially inflated by precautionary stockpiling
• Input prices remain historically elevated
• Eurozone inflation rose to 3.2% in May; ECB rate hike expected this month
• Brent crude prices volatile amid ongoing U.S.-Iran peace negotiations, with year-end futures still 30% above pre-war levels

Market Action

European and Asian markets advanced on tech momentum. U.S. futures pulled back from Monday highs, while Treasury yields softened slightly. Key data ahead includes April JOLTS job openings.