The company's stock has fallen 23% in recent days, including a drop of more than 16% in trading Monday, as Fed rate hike signals threaten to weigh on SpaceX's recently announced investment plan Related TopicsElon Musk’s SpaceX shares plunged 16.4% on Monday, closing at $154.60, 23% below the record reached after the company’s $86 billion initial public offering just nine days ago.The company, which brings Musk’s spacecraft, artificial intelligence and social media operations under one roof, is now trading at a market value of about $2.18 trillion, down from a peak of about $2.5 trillion set on June 16.2 View gallery Elon Musk (Photo: Matt Rourke, AP)The sharp drop in the stock comes amid a steep rise in U.S. Treasury yields, driven in part by expectations that the Federal Reserve will have to raise interest rates in the coming months to rein in inflation. Higher yields on safe bonds hurt highly valued technology groups such as SpaceX, which trades at more than 100 times its earnings over the past year.The broader Nasdaq index also fell 1.3% on Monday, while technology giants including Google, Amazon and Broadcom dropped more than 4%. "Everyone who wanted to buy SpaceX bought in the first few days, and it looks like basically they’re done," Mike O’Rourke of Jones Trading told the Financial Times.The new chair of the Federal Reserve, Kevin Warsh, vowed last week to curb the wave of inflation triggered by President Donald Trump’s Iran war, while his Fed colleagues issued more pessimistic forecasts than expected. Nine of the 18 Fed officials who submitted projections expect higher rates by the end of the year, compared with none who had forecast a rate hike by March. Markets now expect the central bank to raise rates as early as September.2 View gallery Kevin Warsh and US President Donald Trump (Photo: AP Photo/Manuel Balce Ceneta)The yield on two-year Treasuries, which is especially sensitive to expectations for monetary policy, rose 0.05 percentage points Monday to 4.23%, its highest level in more than a year.Higher interest rates also make debt issuance more expensive, and SpaceX is planning to raise up to $20 billion in a bond offering that could launch as soon as this week. The proceeds would be used to repay a $20 billion bridge loan taken out in March, when Musk merged his artificial intelligence company xAI and social network X into the spacecraft company.SpaceX’s future market value rests largely on the assumption that its artificial intelligence arm, which posted a $6.4 billion loss in 2025, is targeting a total potential market of $26.5 trillion.On Monday, SpaceX said it would provide computing resources at its Colossus 2 data center to startup Reflection AI, the latest in a series of deals Musk has signed with companies involved in the artificial intelligence investment boom. SpaceX signed similar deals with Anthropic in April and with Google parent Alphabet in early June, using a business model resembling that of CoreWeave, which provides computing power to technology companies building their own models.Grok, xAI’s chatbot, has so far remained less popular than OpenAI’s ChatGPT, Google’s Gemini and Anthropic’s Claude.Comments