Renaissance ETFs plunged 8.8% Thursday, engulfing in carnage in the broader market as major indexes erased gains from Wednesday’s relief rally after a widely expected hike in the Federal Reserve.
It’s now down 42% so far in 2022, compared to a 13% drop for the S&P 500 SPX,
Amid the scarcity of deals as companies shy away from volatile stock markets amid concerns that the Federal Reserve will not be able to avoid precipitating a recession as it moves to raise interest rates to rein in inflation.
“The second quarter so far has been tough for IPOs, with higher interest rates having a particularly big impact on core valuations of growth stocks,” said Matthew Kennedy, an analyst at Renaissance Capital, a company that provides pre-IPO and IPO research. Concentrated ETFs. The significant price drop is also linked to the overvaluations we saw last year. So the stock had to fall further.”
Federal Reserve Chairman Jerome Powell said on Wednesday that the central bank is not likely to raise the benchmark interest rate by 75 basis points at its next meeting, a comment that immediately sent stocks and DXY higher,
and Treasury yields TMUBMUSD10Y,
minimum. His comments came after the Federal Reserve raised interest rates by 50 basis points, as was widely expected.
But Powell was not pessimistic, but promising to raise interest rates by 50 basis points in a row, and said that it would take a cooldown in superheated inflation or a deteriorating job market for the Fed to slow the pace of rate increases, even after resorting to going. 25 basis = point increments.
Yields rose again on Thursday, with the 10-year Treasury yield TMUBMUSD10Y,
Above 3.06% or its highest level since 2018. That sent stocks down sharply, with the Dow Jones Industrial Average, the Dow Jones Industrial Average,
Get rid of more than 1,100 points and the Nasdaq Composite,
Down more than 600 points.
“We don’t expect things to improve over the next month, especially after today,” Kennedy said. “Instead, at this point in the cycle, we usually see only a few deals that are able to price it. If that does well, and if the broader market cooperates, we expect to see some unicorn tech companies launch their IPOs. But it could take time. That’s months.”
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The IPO market was expecting eye care company Bausch + Lomb BLCO,
to pricing its planned deal late Thursday. The company last week set terms for 35 million shares at $21 to $24 per share, to raise up to $840 million in completing the second-largest deal of the year so far.
350 million shares are expected to remain outstanding after the offering, and the company will be valued at $8.4 billion at the higher end of the price range.
The company is being separated from healthcare company Bausch Health Inc. BHC,
It is scheduled to be listed on the New York Stock Exchange and TSX in Toronto under the ticker symbol “BLCO”, unless the insurers, a group of 20 banks led by Morgan Stanley and Goldman Sachs, refuse to perform on the market today and delay the deal.
Kennedy noted that parent company Bausch Health has lost nearly 20% of its value since the terms were set, so the IPO could end with below-range pricing.
“No matter what happens, we view Bausch + Lomb as an important test of the IPO market,” he said. Moreover, energy services company ProFrac is expected to list next week; The energy sector is one of the few bright spots in the 2022 IPO market.”