Jim Cramer says flood of IPOs weighing on stock prices

Investors can expect stocks to remain under pressure as the market is flooded with new public offerings, CNBC’s Jim Cramer said Thursday.

“A lot of stocks are affected here because there isn’t enough money to buy all the junk that has been created recently,” said the host of “Mad Money”. “Inventories are going down because, just like merchandise in a store, there is just too much inventory, so they’re going down. Speculatives are always the first to go.”

As the second half of 2021 rolls around, Wall Street digests a long list of initial public offerings that came in the first six months of the year. In the first half of the year, more than 210 IPOs raised more than $ 70 billion. June was the busiest month for IPO activity in almost 21 years.

The IPO market has virtually detached the bond market, typically an indicator of the economy at large, from the stock market, Cramer said. If the IPO glut continues, stocks will continue to fall under their own weight, he said.

“If we get a break from the new subscriptions and the earnings continue to be good, then I’m still a bull, but you have to stop the new offering,” Cramer said. “Stocks are going down because people need to sell. They don’t want to lose money.”

The Dow Jones Industrial Average climbed nearly 54 points, or 0.15%, to close at 34,987.02 on Thursday.

The S&P 500 slipped 0.3% while the Nasdaq Composite fell for the third consecutive session.

CNBC’s Bob Pisani contributed to this report.