Think of it as a bull market with no horns. The S&P 500 recently hit an all-time high, a scenario that would normally come with a frenzy of mergers, acquisitions and public offerings. Yet corporate dealmaking has proven oddly muted after a healthy start to 2026. Several high-profile listings, including those of Open AI, fitness tracker Oura and SoftBank's greenfield data centre builder SB Energy, have been postponed. Market conditions are not especially friendly: interest rates, which affect companies' cost of capital, are rising, and consumer confidence has been hit by higher prices, mortgage rates and weak job-hiring trends.
The S&P 500 is also not necessarily the best gauge of sentiment. Technology accounts for 40 per cent of the index, which has far outperformed the more broad-based Russell 2000. Alphabet and Meta Platforms, however, have huge advertising businesses that already throw off large amounts of cash, setting them apart from lossmaking pure-play AI companies such as SB Energy. In the third quarter, global M&A fell below the $1tn level. Boutique investment banks that rely on deal fees have felt the chill, with Evercore shares down nearly a quarter this year.
The big banks are in a better position, since market volatility has been good for trading desks. Broker-dealers recorded record first-half profits of $46bn, up 50 per cent on 2025. Goldman Sachs has given another $500mn special bonus to its senior staff, and analysts expect its investment banking fees to rise 30 per cent for the full year.
Some deals will still get through. Starbucks has reportedly looked at an acquisition of Chipotle Mexican Grill, a cost-cutting combination that would probably involve a share swap given Chipotle's market capitalisation of about $40bn. The slowdown does not reflect any change in how much companies might benefit from teaming up. What has changed is managers' appetite for risk, which has been hit by rising yields and AI jitters. The divergence between booming stock markets and dwindling deal volumes will eventually close, most likely through a fall in equities.
Source: Financial Times Companies · Summarized by HeadlinesBriefing