The S&P 500 recently entered a bull market, with gains primarily driven by large tech and AI firms like Apple and Microsoft, which together account for about 15% of the index. This highlights a growing trend of fewer publicly listed companies traded on US exchanges. In 1996, over 8,000 companies were publicly listed, but today there are only around 3,700. A decrease in listed companies may lead to a lack of transparency and investor trust in the market, warns Matthew Kennedy of Renaissance Capital.
The pandemic and subsequent inflation have contributed to the decline in the number of publicly listed companies. Initial public offerings (IPOs) have sharply decreased since 2022, with the IPO market falling 94.8% to a 32-year low. Bankruptcies have reached their highest level since 2010. Experts say that the current economic conditions are discouraging companies from going public.
Private equity firms, on the other hand, are thriving. There are now approximately five times as many US private equity-backed firms compared to publicly listed companies. Wells Fargo economists found that the average US technology firm became publicly listed after four years in 1999, but in 2019, that number increased to 11 years. Private firms enjoy the benefits of avoiding regulatory costs and focusing on long-term strategic plans.
In a closed-door meeting, Treasury Secretary Yellen emphasized the US's commitment to working with China on urgent global challenges, indicating a possible easing of political and economic tensions between the two powerful nations. CEOs of multinational companies, like Tesla, Starbucks, and JPMorgan Chase, have recently visited China, further hinting at the potential for improved relations between the countries.
Lastly, the current rate of food inflation is negatively affecting the incarcerated population in the US. Staple items such as peanut butter and instant ramen are now significantly more expensive than last year, but wages for incarcerated workers have not increased. With most prisoners earning between $0.14 and $0.63 per hour, this rise in prices compounds the financial challenges that incarcerated Americans face.
