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The Renaissance IPO ETF tumbled 7% Thursday, swept up in the carnage in broader markets as major indexes more than wiped out the gains made in a relief rally Wednesday following a widely expected interest-rate hike.
The ETF
IPO,
is now down 42% in the year to date, amid a dearth of deals as companies shy away from volatile equity markets caused by fears that the Federal Reserve will be unable to avoid a recession as it moves to raise interest rates to rein in inflation.
Fed chair Jerome Powell on Wednesday said the central bank was not likely to hike its benchmark interest rate by 75 basis points at its next meeting, a comment that immediately sent stocks higher and the dollar
DXY,
and Treasury yields
TMUBMUSD10Y,
lower. His comments came after the Fed raised interest rates by 50 basis points as expected.
But Powell was hardly dovish, all but promising consecutive 50-basis-point rate hikes, and saying it would take a cooling in red-hot inflation or a deteriorating jobs market for the Fed to slow down the pace of rate increases, and even then only by 25 basis point increments.
Yields rose again Thursday, with the 10-year Treasury note yield
TMUBMUSD10Y,
above 3.06% or its highest level since 2018. That sent stocks sharply lower with the Dow Jones Industrial Average
DJIA,
shedding more than 1,100 points and the Nasdaq Composite
COMP,
down more than 600 points.
The IPO market was expecting eyecare company Bausch + Lomb
BLCO,
to price its planned deal later in the day. The company set terms last week of 35 million shares priced at $21 to $24 each, to raise up to $840 million and mark the second biggest deal of the year so far.
With 350.0 million shares expected to be outstanding after the offering, the company would be valued at $8.4 billion at the top end of the price range.
The company is being spun out of healthcare company Bausch Health Inc.
BHC,
and will list on the New York Stock Exchange and TSX under the ticker “BLCO,” unless underwriters, a group of 20 banks led by Morgan Stanley and Goldman Sachs balk at today’s market performance and postpone the deal.
