As turmoil mounts, Corporate America plots historic buyback spree

US companies are planning to buy back their own shares at a historic clip, opting to return cash to shareholders and provide some support for their stock price in a time of great uncertainty.  

The value of announced buybacks in the US reached $233.8 billion in April, the second highest monthly tally in records going back to 1984, according to data compiled by Birinyi Associates. Data from Deutsche Bank shows a similar trend, revealing a historic surge in repurchase announcements that are running at more than $500 billion over the past three months.

Corporate heavyweights, such as Apple Inc., Visa Inc., Wells Fargo & Co., Delta Air Lines Inc. and 3M Co. all announced plans to repurchase their shares during the ongoing first-quarter earnings season. 

This marks a dramatic swing from companies’ muted buying in March, when many of them planned to hold on to cash amid rising trade tensions. But as the extreme uncertainty stemming from tariffs in early April subsided and first-quarter earnings turn out largely better than feared, companies are looking to jump back into the fray.

Still, buybacks can often send a mixed signal to investors. While leadership’s willingness to invest money in their own shares can be seen as a sign of confidence, it can also suggest they’re holding off on capital investments due to a lack of certainty about the future.

“The benefit to having an approved buyback program in this environment is that should volatility emerge, the company opportunistically retires shares while supporting the share price,” said Michael O’Rourke, chief market strategist at Jones Trading.

Immense Dry Powder

Birinyi’s data showed that the level of planned buybacks last month was only surpassed in April 2022, when it stood at $242.7 billion. 

“This is an immense amount of dry powder,” that should help support the stock market, said Brian Reynolds, chief market strategist at Reynolds Strategy LLC. 

The S&P 500 Index was down slightly Tuesday morning after snapping a nine-session winning streak — the longest such run in two decades — with Monday’s decline. The index is currently trading above 5,600, and Reynolds now sees the possibility of it falling below 5,000 as much less likely than he did two weeks ago. 

“We want to be a more aggressive buyer of the 5,400 area,” the strategist said.

Last week alone, buyback announcements from S&P 500 companies surged by $119 billion, a much quicker pace than the rapid uptick in the month following the US presidential election, Reynolds said.

The buyback news is coming as investor sentiment has started to stabilize amid hopes that the President Donald Trump’s administration is making progress in reaching deals with key trade partners. Friday’s strong jobs report also allayed fears about the economy grinding to a drastic slowdown. 

At this point, the vote of confidence from corporate leadership in their businesses can help to boost optimism. The buyback plans show “that those with the best insight into a company, the board of directors, are making the decision to still deploy excess cash back into their stock,” said Jeff Yale Rubin, president of Birinyi Associates.

Near-Term Boost

That boost is far from over. According to Citigroup Inc. equity trading strategist Vishal Vivek, companies that make up an estimated 80% of the S&P 500’s market capitalization will be out of their earnings blackout periods by the end of the week. As a result, buyback flows should pick up and potentially serve as “a bid to equities in the near-term,” Vivek said.

Part of the swing between buyback levels in March and April was likely due to this blackout period, Birinyi’s Rubin said, as March tends to be a slower month for repurchases than April. Meanwhile, big buyback plans from some companies that had not announced in a while — such as Goldman Sachs Group Inc., Wells Fargo and Visa — lifted April’s figures. 

To be sure, even a mammoth wave of buybacks may not be a able to lift equities if investor sentiment around trade and tariffs doesn’t improve.

“Incremental buying power, all else equal, is a support for stocks and, in theory, for the market as a whole,” said Julian Emanuel, chief equity strategist at Evercore ISI. Still, buybacks alone are not sufficient to generate more meaningful returns in the S&P 500 in the absence of news on trade deals from Washington.

They are, “however, a very powerful tool on a stock-by-stock basis,” Emanuel added.