May 15, 2022

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Share buybacks on track to set another record

Share buybacks on track to set another record

Companies are unveiling plans to buy back their shares at a record pace, lending support to the ailing stock market.

Companies in the S&P 500 set buyback plans worth $238 billion during the first two months of 2022, according to data from

Goldman Sachs Group Inc..

p 1.29%

the highest level for this point in the year.

They seem to benefit from the ups and downs that shook the markets Recently. Stocks have been under pressure this year due to concerns about the pace of the Fed’s plan to raise interest ratesRussia Invasion of Ukraine And the Rising commodity prices It can stop the economy. The S&P 500 is down 11% year-to-date.

Share buybacks can support stock buybacks by reducing the number of company shares, which increases its earnings per share. They can boost investor sentiment by suggesting that executives are optimistic about their companies’ prospects and are confident in their financial position.

Anthony Saglimpin, global market strategist at

Ameriprise Financial.

Union Pacific Company.

UNP 0.96%

He led the way, as he outlined a $25 billion share buyback plan, while

PepsiCo.

PEP 1.99%

And Industrial Gas Company

Linde PLC

They said they plan to buy back up to $10 billion in stock.

The upsurge in activity continued into March.

Amazon.com Inc.

AMZN 3.89%

He said last week that it would be Buy back up to $10 billion in stockWhile

Colgate-Palmolive Co.

CL 2.07%

And the

Best Buying Company.

BBY 4.67%

He unveiled plans worth $5 billion.

Goldman analysts recently raised their 2022 forecast for buybacks to a record $1 trillion, which is a 12% increase from last year when buyback activity helped push the S&P 500 index up. profit 27%.

Analysts said the breadth of buyback activity is close to a historic high, with the number of active programs twice the usual number.

Share your thoughts

Do you expect to continue the strong pace of share repurchases? Why and why not? Join the conversation below.

To be sure, some investors are concerned that buybacks are redirecting corporate spending away from capital expenditures, research and development and worker wages — driving up stock prices in the short term at the expense of long-term growth.

In mid-December, the Securities and Exchange Commission proposed Greater disclosure requirements for buybackswhich would force companies to detail their rationale and the criteria used to determine the amount of shares to be repurchased.

That hasn’t stopped companies from planning more buybacks this year.

“The companies, in the past six to twelve months, have created something of a fortress in their balance sheets,” said Jessica Beamer, portfolio manager at Easterly Investment Partners. “They are able to defend their company in a way that gives us some comfort while we move through the uncertainty.”

Write to Hardika Singh at hardika.singh@wsj.com

Companies in the S&P 500 have pumped more than $5.3 trillion into their stock buybacks since 2010. The Wall Street Journal explains how share buybacks work, and why there is debate about whether they’re good for the economy.

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