Goldman Sachs saidDownloadsodacrushUs companies are returning to the market as the biggest buyers of US stocks and are preparing to push the next rally in the stock market. With the Fed signalling that interest rates may remain high for longer than expected to curb persistent inflation, investors are counting on the buyback boom to help sustain the rally in US stocks this year.
Strategists at Goldman Sachs predicted last week that total share buybacks by US companies would surge by 13 per cent to 9 per cent in 2024, supported by strong economic growth.Downloadsodacrush, 34 billion US dollars, and will exceed 1 trillion US dollars next year. That would mark a rebound after a 13 per cent decline in 2023, when fears of a potential recession led treasurers to keep cash.
About 1/6 of the estimated $934 billion of share buybacks this year are expected to be carried out in May and June, Goldman Sachs technical analyst Scott Rubner wrote in a note to clients on Tuesday. So far this year, more than $550 billion in authorizations have been done by these companies, he added.
Buybacks have picked up this year, with big tech giants at the forefront. AAPL.US said last week that its board of directors approved a $110 billion share buyback, the largest buyback in US history, and triggered the stock's hottest daily gain in 18 months. Earlier, Google's parent company Alphabet (GOOGL.US) announced a $70 billion buyback plan, and Meta Platforms (META.US) announced a $50 billion buyback plan.
It is worth noting that Lubner also pointed out that US stocks are "entering a favorable seasonal market". He points out that in addition to buybacks, there are many bullish factors, including momentum traders preparing to buy stocks and retail traders being more active in the summer.
Commodity trading advisers (CTA) keep track of asset prices by making long and short bets in the futures market, and they will buy stocks next week no matter how the market moves.
In addition, the potential demand for fixed income will be "huge", which is "the opportunity that investors have been looking for to return to Nasdaq," Lubner wrote.
