Square, Match IPOs Give the Market a Needed Boost

Reports of the tech IPO market's demise have been greatly exaggerated. Square proved that on Thursday in a market debut which helped to minimize broader market losses.
By Keris Alison Lahiff ,

Reports of the tech IPO market's demise have been greatly exaggerated. Square (SQ) - Get Report proved that on Thursday in a debut that was a rousing success. 

Investors' healthy appetite for Square boosted other tech names and helped to minimize market losses across the board. Titans of industry Apple (AAPL) - Get ReportIntel (INTC) - Get Report , and Cisco (CSCO) - Get Report  moved higher. 

The S&P 500 fell 0.11%, the Dow Jones Industrial Average was flat, and the Nasdaq slipped 0.03%.

Square, a mobile payments processor, opened for trading at $11.20, well above its pricing of $9 a share, and ended the day 44% higher at $12.96.

Investors had initially worried that Square's float would prove disappointing, signalling an end of Wall Street hunger for scorching-hot Silicon Valley upstarts. Square priced its IPO at $9 a share, valuing it at $2.66 billion. The implied valuation was a far cry from the $6 billion valuation suggested in its most recent private fundraising round. 

The discrepancy suggested a growing divide between public and private valuation models, particularly for so-called "unicorn" companies, private companies with a valuation of more than $1 billion. Fund manager Fidelity Investments recently even slashed its holdings in popular private companies including app Snapchat. 

A second buzzed-about float on Thursday also helped to allay fears that the IPO market was boiling over. Match (MTCH) - Get Report, owner of dating sites OKCupid and Tinder, opened for trading Thursday around 12% higher than its IPO pricing at just above $13 a share. The company had priced its IPO at $12 a share, the low-end of its $12 to $14 range.

The health care sector kept any upward market momentum in check on Thursday. UnitedHealth (UNH) - Get Report fell more than 5% after issuing weak guidance and warning that it may exit its Obamacare plans. The health insurer reduced its earnings forecasts in a sign that insurance plans through public exchanges had hit its profits.

Pfizer (PFE) - Get Report was also dragging on health care following reports it is in talks to buy drugmaker Allergan (AGN) - Get Report for as much as $370 to $380 a share, a deal that would total $150 billion and mark the healthcare industry's biggest deal ever. The two companies are in the final stages of merger talks, according to CNBC.

Fellow health care stocks moved lower on Thursday, including Gilead Sciences (GILD) - Get Report , Amgen (AMGN) - Get Report , Bristol-Myers Squibb (BMY) - Get Report , and AbbVie (ABBV) - Get Report . The Health Care SPDR ETF (XLV) - Get Report dropped 1.7%. 

Federal Reserve talk also spilled over from Wednesday. U.S. stocks shot above 1% on Wednesday after the central bank's meeting minutes upped the chances of a December rate hike and gave investors, and businesses, the ability to plan for the inevitable move. 

The conditions for a rate hike have been met, Cleveland Fed President Loretta Mester told CNBC on Thursday. Mester said that the target of full employment has been achieved and that she is confident that the inflation target of 2% will be met soon. However, Mester did say that a December hike isn't a certainty; only that members felt that the "things were on track."

Separately, Atlanta Fed President Dennis Lockhart said in a speech that he was "comfortable" moving off of zero soon. Lockhart, a voting member of the Federal Open Market Committee, said that worries over low inflation were not enough to justify keeping rates at crises levels.

In earnings news, Best Buy (BBY) - Get Report shares slumped after disappointing quarterly sales and after it issued a gloomy holiday forecast. Keurig Green Mountain (GMCR) shares spiked more than 20% after the coffeemaker company hiked its quarterly dividend to 32.5 cents a share. 

Salesforce (CRM) - Get Report jumped after far better-than-expected quarterly results. The cloud computing company earned an adjusted 21 cents a share, well above estimates of 4 cents a share, while revenue spiked 24% to $1.7 billion. JM Smucker (SJM) - Get Report added after reporting a 40% jump in sales, driven by its acquisition of Big Heart Pet Brands earlier in the year.

Nike (NKE) - Get Report shares jumped 4% after the bell after announcing a two-for-one stock split and increasing its dividend payment by 14%. The athletics wear company also authorized a $12 billion buyback plan to commence at the end of fiscal 2016. 

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