Jim Cramer says flood of IPOs is weighing on inventory costs

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

“A lot of stocks are hit here because there isn’t enough cash to buy all of the junk that has been created lately,”Bad money“said the host.” Inventories are falling because, like goods in a store, there is simply too much inventory to be devalued. The speculators are always the first to go. “

The second half of 2021 is Wall Street Digesting a long list of IPOs that came in the first six months of the year. In the first half of the year, more than 210 IPOs grossed more than $ 70 billion. June was the single month with the highest turnover for the IPO business for almost 21 years.

The IPO market practically separated the bond market, typically a predictor of the overall economy, from the stock market, Cramer said. If the IPO flood continues, stocks will continue to decline under their own weight, he said.

“If we get some respite from new underwriting and the earnings are still good, I’ll stay a cop, but you have to stop the new offering,” said Cramer. “Stocks go down because people have to sell. They don’t want to lose money.”

The Dow Jones industry average rose 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 declined for the third session in a row.

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CNBC’s Bob Pisani contributed to this report.