Wall Street's big year of deal-making may have ended early — after peaking on the morning of Sept. 19.
It was then that the Chinese e-commerce giant Alibaba went public with a valuation of more than $168 billion. Eight minutes later, the Standard & Poor's 500-stock index hit an all-time high. Earlier that week, several big acquisitions were announced.
Now, less than a month later, September's exuberance feels like a distant memory.
The S.&P. 500 has fallen more than 7 percent. Alibaba still trades above its offer price, but other initial public offerings have been shelved for now. Merger and acquisition announcements have slowed.
"If we get a lot more volatility and there's a significant correction, there's a real risk that deals could get pulled," said Mark G. Shafir, co-head of global mergers and acquisitions at Citigroup.
All year, the stock markets have advanced, initial public offerings have boomed, and mergers and acquisitions have roared back to their highest levels since the financial crisis.
The more than $1.3 trillion in announced mergers and acquisitions so far this year in the United States is the highest amount on record, according to Dealogic, fueled by megadeals like Comcast's $45 billion purchase of Time Warner Cable and Medtronic's $43 billion deal for Covidien. The more than $81 billion in I.P.O.s is the most since 2000, the height of the dot-com boom, led by the Alibaba offering.
In a few short days, however, much of that optimism has evaporated. Bankers across Wall Street say that deals on the verge of being announced are suddenly delayed. I.P.O.s set for this week and next are postponed indefinitely. And the confidence that had fueled record levels of deal-making is nowhere to be found.
"When you're buying and selling companies, you need stability in the markets," said Michael Carr, head of Americas M.&A. for Goldman Sachs. "It doesn't take much for stocks to get out of alignment, and that's what is going on right now."
The sustained run of mergers and acquisitions is particularly vulnerable to suddenly volatile markets, several senior investment bankers said. A majority of the deals announced this year have involved at least partial payment in stock.
"Unlike on the trading side of the business, volatility is not our friend in M.&A.," Mr. Shafir noted.
When the acquirer's stock suddenly loses value, what was once an economical deal can suddenly seem unaffordable. Similarly, when a company that was poised to sell sees its stock fall, executives often want to wait for the stock price to recover before selling to get the best possible price.
"A good M.&A. market happens when both parties are comfortable with the relative relationships between their two stocks," Mr. Carr said. "That relationship is a really narrow and sensitive band."
But with companies' valuations jumping around, many deals are expected to be delayed until the markets stabilize.
For companies seeking to go public, the roller coaster markets are similarly disruptive.
"The market is taking a breath, and therefore the I.P.O. market will also take a breath," said David Hermer, global head of equity capital markets at Credit Suisse. "Issuers are standing on the sideline for the moment."
In Europe, a handful of planned I.P.O.s were withdrawn in the last two weeks, including those of the British bank Aldermore, the Italian cosmetics company Intercos, the French energy services company Spie, and the Italian technology company Italiaonline.
With renewed fears of an economic slowdown in Europe, sustained unrest in the Middle East and Ukraine, and swelling fears of Ebola around the globe, the markets may not stage a strong recovery anytime soon.
"There's a lot of stuff going on the world right now," said Neil Dhar, United States capital markets leader at PricewaterhouseCoopers. "Volatility is not the friend of an I.P.O. It creates a lot of angst in the marketplace."
And still, many deal makers said they believed that the underlying conditions for mergers, acquisitions and I.P.O.s remained healthy. Investors are looking for growth, which leads to deals and new public offerings. And companies have lots of cash to spend.
"A one or two week up-and-down in the marketplace isn't going to change global M.&A. activity overnight," Mr. Dhar said. "It's not the sign of a death knell for new issuance through the end of the year."
And there are some bright spots.
Several big breakups and spinoffs, including those of Hewlett-Packard, eBay and Symantec, could lead to activity in the months ahead. Big industrial groups like DuPont and Dow are also expected to sell off business units.
"In the pipeline there are a huge amount of spinoffs," said Sriram Prakash, global head of M.&A. insight at Deloitte. "Those are likely to keep the M.&A. markets busy."
What is more, if stock prices fall precipitously and remain low, some companies may go after targets that suddenly seem affordable.
"Some opportunistic corporate players who have cash and a strong balance sheet may take the opportunity to act in a market when values are down," Mr. Carr said.
Private equity firms, which have largely held back from buying companies this year, might also be emboldened by a sustained dip in corporate valuations.
Noting the $18 billion war chest in its possession, the private equity giant Blackstone Group said it would look for opportunities in the market turmoil.
"We are uniquely positioned to take advantage of market volatility across all of our businesses," Stephen A. Schwarzman, Blackstone's chairman and chief executive, told analysts on Thursday. "With one of the largest pools of dry powder capital, we can and will move quickly to respond to market dislocations. These types of investment environments end up becoming some of our best vintages."
A Soaring Debut for Alibaba
By MICHAEL J. DE LA MERCED
The Chinese Internet giant, which raised $21.8 billion in its stock sale, instantly became one of the biggest publicly traded technology companies in the world.
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