Stock Market Quarterly Review --- Wall Street's Woe: Securities Underwriting Declined in Third Quarter --- Global Volume Fell 12.6%, Though Terror Attacks Hurt Year-Earlier Performance
A steep stock-market plunge in July, the threat of war with Iraq, a sputtering economy and a series of corporate-accounting scandals all combined to slow the pace of securities underwriting in the third quarter.</br></br>Global underwriting volume fell 12.6% to $774 billion in the quarter from the third quarter of 2001, which was itself hard hit by the terrorist attacks of Sept. 11, 2001, according to Thomson Financial, which tracks securities transactions. But some Wall Street executives say they have seen some signs of a pickup in the past few weeks, since the passage of the attacks' first anniversary.</br></br>The impact of events in the third quarter was even more severe on disclosed underwriting fees, a more-telling barometer for Wall Street. Fees fell 21% to $2.31 billion amid a falloff in more-lucrative stock deals, such as initial public offerings. The tiny number of just seven IPOs by U.S. issuers in the quarter was the lowest since the first quarter of 1980, noted Richard Peterson, chief market strategist at Thomson Financial.</br></br>"My sense is that corporate America was very distracted in the third quarter," particularly by the mandate for chief executives to certify their companies' financial results to the Securities and Exchange Commission by mid-August, said Jay Chandler, head of equity syndicate at Merrill Lynch & Co. "Strategic discussions slowed down dramatically, and financing discussions almost came to a standstill," Mr. Chandler added.</br></br>Jon Anda, co-head of global capital markets at Morgan Stanley, attributed the 43% dropoff in the U.S. volume of equity and equity-linked securities issuance in the quarter partly to the stock-market decline. The Standard & Poor's 500-stock index was down about 18% for the quarter, "and you don't find many quarters like that," Mr. Anda said. (The S&P 500 was off 13.7% in the second quarter.) "It was a very difficult quarter. We would all like to see this as a market bottom, but a bottom has been elusive."