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Exclusive-Musk’s SpaceX is building spy satellite network for US intelligence agency, sources say
© Reuters. FILE PHOTO: SpaceX headquarters is shown in Hawthorne, California, U.S. September 19, 2018. REUTERS/Mike Blake/File Photo
By Joey Roulette and Marisa Taylor
WASHINGTON (Reuters) – SpaceX is building a network of hundreds of spy satellites under a classified contract with a U.S. intelligence agency, five sources familiar with the program said, demonstrating deepening ties between billionaire entrepreneur Elon Musk’s space company and national security agencies.
The network is being built by SpaceX’s Starshield business unit under a $1.8 billion contract signed in 2021 with the National Reconnaissance Office (NRO), an intelligence agency that manages spy satellites, the sources said.
The plans show the extent of SpaceX’s involvement in U.S. intelligence and military projects and illustrate a deeper Pentagon investment into vast, low-Earth orbiting satellite systems aimed at supporting ground forces.
If successful, the sources said the program would significantly advance the ability of the U.S. government and military to quickly spot potential targets almost anywhere on the globe.
The contract signals growing trust by the intelligence establishment of a company whose owner has clashed with the Biden administration and sparked controversy over the use of Starlink satellite connectivity in the Ukraine war, the sources said.
The Wall Street Journal reported in February the existence of a $1.8 billion classified Starshield contract with an unknown intelligence agency without detailing the purposes of the program.
Reuters reporting discloses for the first time that the SpaceX contract is for a powerful new spy system with hundreds of satellites bearing Earth-imaging capabilities that can operate as a swarm in low orbits, and that the spy agency that Musk’s company is working with is the NRO.
Reuters was unable to determine when the new network of satellites would come online and could not establish what other companies are part of the program with their own contracts.
SpaceX, the world’s largest satellite operator, did not respond to several requests for comment about the contract, its role in it and details on satellite launches. The Pentagon referred a request for comment to the NRO and SpaceX.
In a statement the NRO acknowledged its mission to develop a sophisticated satellite system and its partnerships with other government agencies, companies, research institutions and nations, but declined to comment on Reuters’ findings about the extent of SpaceX’s involvement in the effort.
“The National Reconnaissance Office is developing the most capable, diverse, and resilient space-based intelligence, surveillance, and reconnaissance system the world has ever seen,” a spokesperson said.
The satellites can track targets on the ground and share that data with U.S. intelligence and military officials, the sources said. In principle, that would enable the U.S. government to quickly capture continuous imagery of activities on the ground nearly anywhere on the globe, aiding intelligence and military operations, they added.
Roughly a dozen prototypes have been launched since 2020, among other satellites on SpaceX’s Falcon 9 rockets, three of the sources said.
A U.S. government database of objects in orbit shows several SpaceX missions having deployed satellites that neither the company nor the government have ever acknowledged. Two sources confirmed those to be prototypes for the Starshield network.
All the sources asked to remain anonymous because they were not authorized to discuss the U.S. government program.
The Pentagon is already a big SpaceX customer, using its Falcon 9 rockets to launch military payloads into space. Starshield’s first prototype satellite, launched in 2020, was part of a separate, roughly $200 million contract that helped position SpaceX for the subsequent $1.8 billion award, one of the sources said.
The planned Starshield network is separate from Starlink, SpaceX’s growing commercial broadband constellation that has about 5,500 satellites in space to provide near-global internet to consumers, companies and government agencies.
The classified constellation of spy satellites represents one of the U.S. government’s most sought-after capabilities in space because it is designed to offer the most persistent, pervasive and rapid coverage of activities on Earth.
“No one can hide,” one of the sources said of the system’s potential capability, when describing the network’s reach.
Musk, also the founder and CEO of Tesla (NASDAQ:) and owner of social media company X, has driven innovation in space but has caused frustration among some officials in the Biden administration because of his past control of Starlink in Ukraine, where Kyiv’s military uses it for secure communications in the conflict with Russia. That authority over Starlink in a war zone by Musk, and not the U.S. military, created tension between him and the US government.
A series of Reuters’ stories has detailed how Musk’s manufacturing operations, including at SpaceX, have harmed consumers and workers.
The Starshield network is part of intensifying competition between the U.S. and its rivals to become the dominant military power in space, in part by expanding spy satellite systems away from bulky, expensive spacecraft at higher orbits. Instead a vast, low-orbiting network can provide quicker and near-constant imaging of the Earth.
China also plans to start building its own satellite constellations, and the Pentagon has warned of space weapon threats from Russia, which could be capable of disabling entire satellite networks.
Starshield aims to be more resilient to attacks from sophisticated space powers.
The network is also intended to greatly expand the U.S. government’s remote-sensing capabilities and will consist of large satellites with imaging sensors, as well as a greater number of relay satellites that pass the imaging data and other communications across the network using inter-satellite lasers, two of the sources said.
The NRO includes personnel from the U.S. Space Force and CIA and provides classified satellite imagery for the Pentagon and other intelligence agencies.
The spy satellites will house sensors provided by another company, three of the sources said.
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By Alden Bentley, Samuel Indyk and Rae Wee
NEW YORK/LONDON (Reuters) -Wall Street topped off a global share rally in thin trade on Thursday as markets prepared for early Christmas Eve closes, while the dollar was buoyed by firmer Treasury yields and speculation that the Federal Reserve would slow its easing in 2025.
The was 0.47% higher in late morning trade, the rose 0.73% and the rose 0.99%.
U.S. stock trading wraps up at 1:00 p.m. EDT/1800 GMT, and the bond market closes at 2:00 p.m. Most financial centers around the world are closed on Wednesday for Christmas. The U.S. reopens on Thursday, while many financial centers have a second day off.
“Meagre news and data flow should keep the focus on a more hawkish Fed,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
MSCI’s gauge of stocks across the globe went up more than half a percent. The pan-European index rose 0.18%. 100 rose 0.19% and 40 rose 0.14%. German stocks were closed for the Christmas holiday.
In Asia, Chinese stocks rose after sources told Reuters that Beijing planned to issue a record amount of special treasury bonds next year as it ramps up fiscal stimulus to revive a faltering economy.
The blue-chip index and both ended 1.3% higher. Hong Kong’s advanced 1.1%.
The news came shortly after China’s finance ministry said authorities would ramp up fiscal support for consumption next year by raising pensions and medical insurance subsidies for residents, as well as expanding consumer goods trade-ins.
Still, investors remain cautious on the outlook for the world’s second-largest economy, particularly as it faces the threat of hefty tariffs from U.S. President-elect Donald Trump.
Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.37%.
FED FOCUS
Investors are taking direction from last week’s 25 basis point Fed interest rate cut, its signals on the strength of the economy and its slow progress bringing inflation down to its 2% target. Markets are now pricing in about 35 basis points of easing for 2025, implying one quarter-point rate cut and around a 40% chance of a second.
U.S. Treasury yields pared gains after the Treasury saw solid demand for a $70 billion sale of five-year notes, but remained higher on the day. The two-year Treasury yield, which is sensitive to changes in Fed rate expectations, was up 0.9 bp at 4.359%, while the benchmark 10-year yield rose 2.6 bp to 4.625%, reaching a seven-month high at 4.629%. [US/]
“Like markets, the Fed will need to consider U.S. policies on tariffs and immigration in its inflation and growth outlook. We believe the subtle slowing in the U.S. labor market will still be the Fed’s paramount concern,” said analysts at Citi Wealth.
“While always uncertain, our base case expectation for a 3.75% policy rate is unchanged. It’s a far cry from the 1.7% U.S. policy rate average of the past 20 years.”
The Fed’s cut was the third one this cycle, taking the Fed funds rate to 4.25%-4.5%.
Ahead of Trump’s return to the White House in January, global central banks have urged caution over their rate paths due to uncertainty on how his planned tariffs, lower taxes and immigration curbs might affect policy.
Data on Monday showed U.S. consumer confidence unexpectedly weakened in December as the post-election euphoria fizzled and concerns about future business conditions emerged.
In currencies, the rose 0.14% hovering near a two-year high hit Monday, having climbed more than 2% in December so far.
The euro eased 0.15% to $1.0389, while the yen languished near last week’s five-month low, trading at 157.35 per dollar.
Japan’s Finance Minister Katsunobu Kato on Tuesday reiterated Tokyo’s discomfort with excessive foreign exchange moves and put speculators on notice that authorities are ready to act to stabilise a faltering yen.
rose 0.13% to $2,616.26 an ounce, having risen about 27% this year, heading for its biggest yearly gain since 2010.
rose 1.56% to $70.32 a barrel and rose to $73.73 per barrel, up 1.51% on the day. [O/R]
By David French
(Reuters) -Wall Street’s main indexes all ended higher on Tuesday, with gains in megacap and growth stocks bolstering benchmarks in a truncated Christmas Eve session.
Both the and the scored four straight sessions of gains. For the Dow, the run follows its 10-session skid earlier this month, its longest losing streak since 1974.
The benchmarks closed higher on the first day of a historically strong period called the “Santa Claus rally.” The on average has gained 1.3% in the last five days of December and first two days of January, according to data from the Stock Trader’s Almanac going back to 1969.
With megacap stocks having outsized influence on markets, their performance is often a key driver of indexes. When coupled with reduced trading volumes and few other catalysts, as many investors take time off for the holidays, this is even more pronounced.
All the so-called Magnificent Seven megacap technology stocks climbed on Tuesday, led by Tesla (NASDAQ:).
The automaker’s rise helped push consumer discretionary shares higher, making them the top gaining sector in the S&P.
Elsewhere, chip manufacturers were also buoyant. Broadcom (NASDAQ:) and Nvidia (NASDAQ:) were up, while Arm Holdings (NASDAQ:) climbed a day after losses from losing a court case.
Growth names rose despite U.S. Treasury interest rates remaining elevated – the benchmark 10-year note yielded around 4.61% on Tuesday. Traditionally, higher debt costs crimp growth stocks.
However, the long-term themes around technology development, including advancements in artificial intelligence, overshadow any near-term moves in Treasuries, said Charlie Ripley, senior investment strategist for Allianz (ETR:) Investment Management.
“This reinforces that view that the sector is going to remain strong, and should be well into the new year,” he said.
According to preliminary data, the S&P 500 gained 64.93 points, or 1.09%, to end at 6,039.00 points, while the Nasdaq Composite gained 264.31 points, or 1.34%, to 20,029.19. The Dow Jones Industrial Average rose 366.75 points, or 0.85%, to 43,273.70.
Stock markets shut at 1:00 p.m. ET on Tuesday and will be closed for Christmas on Wednesday.
After a stellar run to record highs following the November election, which sparked hopes of pro-business policies under U.S. President-elect Donald Trump, Wall Street’s rally hit a bump this month as investors grappled with the prospect of higher interest rates in 2025.
The U.S. Federal Reserve eased borrowing costs for the third time this year last Wednesday, but signaled only two more 25-basis-point reductions next year, down from its September projection of four cuts, as policymakers weigh the possibility of Trump’s policies stoking inflation.
Allianz’s Ripley said the themes which had driven the market higher in the past two months remained intact, and actions by the Fed had not killed the rally.
“Heading into 2025, things are set up with good positioning,” he said, noting factors including economic outlook, consumption in the U.S. and the labor market.
Crypto-related stocks traded higher on Tuesday, including Microstrategy (NASDAQ:), Riot Platforms (NASDAQ:), and MARA Holdings, as the price of bitcoin advanced.
NeueHealth soared after the healthcare provider said New Enterprise Associates, its largest shareholder, and a group of existing investors will take the company private in a $1.3 billion deal.
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