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To stay informed about the IPO market, subscribe to Economic Fears, Profit Woes Leads to Rate Easing By Jeffrey R. Hirschkorn, Senior IPO Analyst The second quarter IPO market was definitely a major improvement of what transpired in the year's first three months. Still, the quarter was held back over economic concerns and profit warnings. Those problems led the Federal Reserve to ease rates each time the Federal Open Market Committee met. Thus, creating a more investor friendly environment. By lowering rates in a highly questionable market, it allowed underwriters to carefully admit new entrants to the corners of Broad and Wall Street. At the beginning of the second quarter, investors were clearly fascinated with energy issues. After that fad began to fall out of favor, medical diagnostic and healthcare firms took center stage. Moving along, insurance IPOs gained momentum towards the end of the second quarter. However, none of those sectors could overcome that dominance and potential market setting IPO from Kraft Foods (ticker: KFT). "The second quarter of 2001 for IPO investors was like one long flight delay at LaGuardia Airport," said Renaissance Capital Management, of Greenwich, Conn., in its recount of the IPO market. "As the quarter progressed it became evident that a rally in the IPO market might be late, and underwhelming in its initial scope, but it would get there." Added Joe Hammer, director of equity capital markets at Adams, Harkness & Hill in a recent interview: "The slower IPO market produced stronger IPOs this quarter. We've got a decent tone to the market and a select number of quality deals are getting out. Everyone is being careful about the quality of offerings being scheduled." However, not everyone is excited with the prospects for the third quarter. "In the second half, there's not much confidence the market for IPOs will be any better," said Richard Peterson, market strategist for Thomson Financial Securities Data in an interview with Reuter's. "In the first half, bond issuance was at record levels. Banks are putting all their energy into that area."
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