Stocks week ahead: Wall Street dealmakers have never been busier
What’s happening: The US market for initial public offerings has been on fire this year, setting post-2000 records in the first and second quarters, according to Renaissance Capital. In the April to June period alone, there were 113 IPOs raising nearly $40 billion.
“It was the busiest quarter for IPOs in over two decades, a record that was just broken last quarter, as well as the biggest second quarter by proceeds ever,” the group wrote in a report published Friday.
The scale: Globally, IPOs have raised almost $312 billion year-to-date, with 1,314 companies hitting public markets, according to data from Dealogic provided to CNN Business.
Some high-profile names are due to follow suit shortly, as they look to take advantage of a moment when investors are flush with cash.
Mergers and acquisitions are going strong, too, as companies gear up for the post-pandemic period. So far in 2021, there have been more than 15,500 tie-ups worth $2.9 trillion, per Dealogic — a record for the first six months of a year.
“As economies around the world begin to recover thanks to the successful development of multiple Covid-19 vaccines, companies have increasingly turned to M&A to prepare for a post-Covid world,” JPMorgan said in its most recent update for clients.
The pipeline is expected to hold up heading into the second half of the year. While cash remains the “dominant” method of financing deals, according to JPMorgan, firms are increasingly eying stock purchases as valuations soar. Debt also remains incredibly cheap as central banks maintain crisis-era policies.
Fun fact: Things are so crazy on Wall Street right now that banks are experiencing a shortage of analysts. Some senior bankers have had to take on more junior tasks while their companies try to staff up, said Kevin Mahoney, who leads the investment banking practice at search firm Bay Street Advisors in New York.
“With [interest] rates being where they are, the opportunity in the markets has been fantastic,” Mahoney said. “There’s just a lot of activity that banks quite frankly weren’t prepared for.”
Watching for rising wages in the US jobs report
The latest US jobs report, due Friday, is set to be another blockbuster.
Coming up: Economists surveyed by Refinitiv predict that the US economy will have added 675,000 jobs in June, up from 559,000 in May. That would send the unemployment rate down to 5.6%.
But Wall Street won’t only be focused on the headline jobs number.
“The report may also provide further evidence that labor shortages are putting upward pressure on wage growth,” said Andrew Hunter, senior US economist at Capital Economics.
In May, average hourly earnings rose by 15 cents to $30.33 as companies tried to get employees in the door to fill open positions. Wages are expected to have risen again in June to $31.54 per hour.
Policymakers are closely watching wages while they monitor the economy for signs of unhealthy inflation. Investors are banking that upward pressure on wages will remain relatively muted, helping offset gains in the price of raw materials and other goods and services driven by a spike in demand and snarled supply chains.
“We won’t see all the vacancies filled overnight — it takes time for employers to fill open positions,” Williams said. “With the strong, sustained demand for workers and progress on hiring, I am confident that we will see continued strong job gains going forward.”
Monday: Mobile World Congress begins
Tuesday: S&P Case-Shiller Home Price Index and US consumer confidence data
Friday: US jobs report