But if you kept going down Broadway for another 3.4 miles, you’d find Wall Street was a lonely place — no crowds, nothing to cheer about.
The drumbeat south of Herald Square was grim: more worries about the fallout from the subprime mortgage fiasco, oil prices near $100 per barrel and the endless interest-rate concerns. That sent the crowd running for cover. In fact, the last six weeks have been devastating for investors, and the word “correction” could very well surface.
In Wall Street’s lexicon, a correction occurs when the market experiences a sell-off of 10 percent from its previous closing high. Wednesday’s close started flirting with that figure. Here’s what the picture looked like on Nov. 21:
The Dow Jones Industrial Average closed on Wednesday at 12,799.04, DOWN 9.64 percent from 14,164.53 on Oct. 9, its most recent closing high. A 10 percent sell-off would put the Dow at 12,748.08.
The Nasdaq Composite Index closed on Wednesday at 2,562.60, DOWN 8.86 percent from 2,811.61 on Oct. 10, its most recent closing high. A 10 percent sell-off would put the Nasdaq at 2,530.45.
The S&P 500 closed on Wednesday at 1,416.77, DOWN 9.48 percent from 1,565.16 on Oct. 9, its most recent closing high. A 10 percent sell-off would put the S&P 500 at 1,408.64.
Imported Turkeys
In keeping with the Thanksgiving spirit, the IPO market has inadvertently given investors a few turkeys. They have come from an unexpected source — Chinese IPOs.
Not too long ago, Chinese IPOs were hot — a slam dunk for sharp opening-day gains — but no more. Recently, many have stumbled into negative territory.
Since the beginning of 2007, bankers have priced 25 Chinese IPOs, according to U.S. Securities and Exchange Commission filings. As of Friday’s close, 11 of the Chinese IPOs closed above their initial offering prices and 14 were losers -– that’s right, 11 out of 25 were trading above their initial offering prices. That leads to the old Wall Street saying: “You’re only as good as your last trade.”
By Friday’s close, four of the last five Chinese IPOs to be priced were losers:
— On Oct. 30, CNinsure (Nasdaq: CISG) priced its IPO of 11.7 million shares at $16 each. It closed its opening day at $25.29, UP 58.1 percent fro its initial offering price. The IPO sold at its high of $28.74 per share during its opening day of trading and sold at a low of $12 on Nov. 21, DOWN 25 percent from its offering price.
CNinsure closed on Friday, Nov. 23, at $15.88, DOWN 0.75 percent from its offering price. (The U.S. stock market was closed on Thursday for Thanksgiving.)
— On Oct. 31, Giant Interactive Group (NYSE: GA) priced its IPO of 57.2 million shares at $15.50 each. It closed its opening day at $18.23, UP 17.6 percent from its initial offering price. The IPO sold at its high of $20.46 per share during its opening day’s trading and sold at a low of $9.57 on Nov. 21, DOWN 38.3 percent from its offering price.
Giant Interactive closed on Friday at $11.50, DOWN 25.8 percent from its offering price.
— On Nov. 6, Agria (NYSE: GRO) priced its IPO of 17.2 million shares at $16.50 each. It closed its opening day at $12.06, DOWN 26.9 percent from its initial offering price. The IPO sold at its high of $17 per share during its opening day of trading and sold at a low of $7 on Nov. 21, DOWN 57.6 percent from its offering price.
Agria closed on Friday at $9.98, DOWN 0.75 percent from its offering price.
The exception to the downtrend was AirMedia Group (NASDAQ: AMCN), which priced its IPO of 15 million shares at $15 each on Nov. 6. It closed its opening day at $20.90, UP 39.3 percent from its initial offering price. The IPO sold at its high of $22.71 per share during its opening day of trading and sold at a low of $15.60 on Nov. 21, UP .75 percent from its offering price.
AirMedia closed on Friday at $16.56, UP 10.4 percent from its offering price.
— On Nov. 8, China Nepstar Chain Drugstore (NYSE: NPD) priced its IPO of 20.6 million shares at $16.20 each. It closed its opening day at $17.50, UP 8.02 percent from its initial offering price. The IPO sold at a high of $21.25 per share on Nov. 14 and sold at a low of $14.60 on Nov. 21, DOWN 9.88 percent from its offering price.
China Nepstar closed on Friday at $15.89, DOWN 1.91 percent from its offering price.
Solo Flight
Not too surprisingly, there are no Chinese IPOs on the new-issues calendar poised to take flight in the U.S. securities markets in the near future.
This brings us to this week’s IPO calendar.
The week following the Thanksgiving Day break is usually quiet, and this year is no different. There’s just one IPO on the calendar and it is a “blank check” deal.
It is Tremisis Energy Acquisition Corporation II (AMEX: tba), which expects to price 9.5 million units at $8 each.
Historically, “blank check” IPOs trade around their initial offering prices. That’s what is expected from this week’s deal.
And then Father Time ushers in December. If you take a look at the IPO calendar, you’ll see the traffic is starting to build. So stay tuned.