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Get Ready for a September IPO Spike

By Maureen Farrell

Morning MoneyBeat is the Journal's pre-market primer. To receive this morning newsletter via email, click here: http://on.wsj.com/MoneyBeatUSSignup

Market Snap at Wed, 24 Aug 2016 08:22:20 -0400 ET

S&P 500 Futures 0.06%

↑ 2186.5

DJIA Futures 0.03%

↑ 18534

U.S. 10 Year 1/32

↓ 1.546%

WSJ Dollar Index 0.11%

↑ 85.79

Crude Oil -2.06%

↓ $47.11

Gold -0.31%

↓ $1341.90

Europe

Asia

FTSE 100

-0.07%

Nikkei 225

0.61%

DAX

0.47%

Hang Seng

-0.77%

CAC 40

0.59%

Shanghai

-0.12%

Overnight Developments

Stocks and the dollar were listless in quiet trading Wednesday, as investors largely shrugged off a fresh fall in the price of oil.

Futures pointed to a 0.1% opening rise for the S&P 500, as the Stoxx Europe 600 was up 0.5% in afternoon trading.

Earlier Wednesday, shares in Asia were mixed. Stocks in Hong Kong shed 0.8%, weighed by property companies, while Japanese stocks rose 0.6% as the dollar gained slightly against the yen, supporting shares of exporters.

The Breakfast Briefing

The market for initial public offerings could finally wake up after Labor Day - for a few weeks, at least.

Amid the slowest year for IPOs since 2009, the offerings that have actually made it to market have soared. The high investor appetite for IPOs, alongside record-high stock prices and low volatility, has enticed more executives to plan listings in September and early October, according to several underwriters.

So far this year, just 63 companies have braved the IPO market, raising $12.9 billion -- a 50% drop from last year's year-to-date volume and down 73% from 2014's, according to Dealogic. IPO volume has been this low by mid August during only two other years -- in 2003 and 2009 -- in Dealogic's database which goes back to 1995.

Yet the companies that have debuted this year are currently trading 27% above their offering price, outperforming the major stock indexes by a wide margin, according to Dealogic data. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite are up between 5% and 7% this year.

Technology IPOs have seen an outsize slowdown this year -- accounting for just 19% of all IPOs compared to 32% of all IPOs during an average year -- yet most of those tech companies that have come to market have inked big gains. Acacia Communications Inc., the best-performing IPO this year, is trading 382% above its IPO price, and Twilio Inc., the first venture capital-backed tech IPO of 2016, is the second-best performing IPO of the year, currently trading 274% above its IPO price.

Bankers say the performance of recent IPOs has caused companies that have been holding off on IPOs to eye the window after Labor Day to dust off their offering documents. These bankers say that the technology sector could see a spate of offerings -- though few if any of the largest billion-dollar startups will be among them. Additionally, several consumer and industrial companies are expected to debut.

The IPO window may only be open until mid October, though. Bankers say that they'll try to price IPOs then to avoid potential election-related volatility.

After mid October, the IPO window could be closed through 2017, as companies won't have time to launch IPOs after Election Day, conduct a two-week roadshow and price before Thanksgiving. In most years, few companies launch in December, as there's wariness around a holiday, year-end slowdown.

Daily Factoid

On this day in 2011, Steve Jobs resigns as CEO of Apple.

MoneyBeat Podcast

Play Podcast →

In an encore presentation, the MoneyBeat crew examines how the commodities world impacts the economy just as much as our every day lives.

Tweet of the Day

Many wrongly think shorting is a Hedge. It's another open position at risk. The only true hedges are reduced position sizes and cash. -- LTentarelli @LMTentarelli

Key Events

9:00 a.m.: FHFA House Price Index for July [Prior: 0.2% Consensus: 0.3%]

The FHFA house price index slowed to only a 0.2% gain in June, one of the weakest gains in years, and economists expect July to be only slightly better. While soft home prices are a negative for household wealth, its a positive for sales which have been increasingly solid.

10:00 a.m.: Existing Home Sales for July [Prior: 5.57 million; Consensus: 5.52 million]

Existing U.S. home sales rose in June to the fastest pace in nearly a decade, buoyed by low mortgage rates and an improving economy. But for July, seasonally adjusted existing-home sales likely dropped by 0.4%, according to a WSJ survey of economists.

10:30 a.m.: EIA Petroleum Status Report

Analysts expect EIA data to show that U.S. crude-oil stocks to have decreased by 200,000 barrels, on average, in the week ended Aug. 19. Gasoline stockpiles are expected to fall by 1.4 million barrels, according to analysts. Stocks of distillates, which include heating oil and diesel, are expected to rise by 400,000 barrels. Refinery use is seen falling 0.4 percentage point to 93.1% of capacity, based on EIA data.

Stocks to Watch

Shares of Express Inc. tumbled 19% ahead of the opening bell after the clothing and accessories retailer's second-quarter results and third-quarter forecast fell short of expectations.

Shares in La-Z-Boy Inc. are down 15% before the bell after the furniture maker's quarterly earnings and sales missed expectations.

Intuit Inc., the maker of TurboTax software, posted a weak outlook for the current quarter late Tuesday. Shares are down 6.1% in premarket trading.

Pfizer Inc. shares are up 0.3% after the drug maker agreed to buy part of AstraZeneca PLC's antibiotics business for up to $1.575 billion plus royalties.

Real estate group Jones Lang LaSalle Inc. before the bell said Chief Executive Colin Dyer will step down from that role on Sept. 30.

Today's Video

Play Video →

How did the diamond ring become the symbol of love and matrimony? Rachelle Bergstein, author of "Brilliance and Fire: A Biography of Diamonds," joins WSJ's Shelby Holliday with a look at jewelry's most coveted item.

Number of the Day

$184 billion

Exxon Mobil, Royal Dutch Shell, BP, and Chevron hold a combined net debt of $184 billion—more than double their debt levels in 2014, when oil prices began sliding.

Must Reads

Path to White House Narrows for Trump: As the traditional Labor Day kickoff of the fall presidential race approaches, Republican Donald Trump faces an increasingly narrow path to the White House.

Two Ex-Goldman Traders Look for Bonanza in Mortgage Bonds: Two former Goldman traders snapped up beaten-down mortgage bonds, wagering that unusual wording in their contracts would net them millions when a bank settlement paid out.

Oil at $50 Tests Shale-Band Theory: The return of oil prices to about $50 a barrel presents a test for an idea that gained currency early after the market's long swoon began two years ago: the 'shale band.'

The Woman Who Revived Russia's Markets: Two years after plunging oil prices and sanctions fueled an investor exodus from Russia, the nation's stock market and currency are on the upswing. Many investors credit central-bank chief Elvira Nabiullina for the resurgence.

Fugitive Tech CEO Alexander Returning to U.S. in Plea Deal: Kobi Alexander, a fugitive technology executive who has spent a decade hiding in Africa from criminal charges in a stock-options backdating scandal, is returning to the U.S. to plead guilty in Brooklyn federal court.

Retailers Could Fail the Back-to-School Test: Retailers with a significant back-to-school business face easy comparisons, but that may already be priced into their shares.