The new Nasdaq IPO Pulse Index functions as a leading indicator for the IPO Market by forecasting the direction of US IPO activity over the next six months. 

IPO activity rises and falls in cycles. You might think it is affected by things like interest rates, the level of economic activity, corporate profits and appetite for finance. But what really drives changes in the IPO market?

This index looks for indicators that show the trend in IPOs before the actual IPO data changes. 

To create the index, the Nasdaq Economic Research team backtested over 50 data series to identify six core factors that theoretically and empirically show shifts in IPO activity over the last two or more decades, with few false alarms. Combined, these indicators have proven to consistently lead directional shifts in IPO activity. The six factors are as follows: 

Interest Rates:

Year-over-year change in Fed Funds Rate

Market Volatility:

Year-over-year change in the VIX

Recent Returns:

S&P 500 Price Annual Growth

Valuations:

S&P 500 Enterprise Value to Sales Ratio Annual Growth

Investor Sentiment:

The difference between Consumers Expecting Stock Prices to Increase in the next 12 month and decrease in the next 12 months. 

Nasdaq's Proprietary IPO Data