Corporate America’s buybacks are raging on, defying fears that a potential US economic recession could hamper the outlook for profits.
(Bloomberg) — Corporate America’s buybacks are raging on, defying fears that a potential US economic recession could hamper the outlook for profits.
Bank of America Corp.
is seeing insider stock purchases accelerate among its corporate clients — the only net buyers of US equities last week. The group drove $2.2 billion into US shares in the five-day period, while institutional, hedge fund and retail clients were all net sellers.
“Buybacks have been tracking above typical seasonal trends the last five weeks after tepid trends in February and March year-to-date,” BofA strategists led by Jill Carey Hall said in a note to clients Tuesday.
The frenzied corporate buying came during a turbulent week for stocks wrought by renewed concerns over the health of the US financial system and the debt ceiling discussions.
Even as companies snapped up shares, the benchmark S&P 500 Index closed down 0.8% for the week.
The appetite for share repurchases may serve as a positive signal to equity bulls that US firms remain confident in their financial outlooks, even as Wall Street frets over a profit recession.
Buyback announcements more broadly continued to boom during this earnings season.
Companies in the S&P 500 announced nearly $200 billion worth of stock purchases in the past three weeks, according to data compiled by Deutsche Bank Research.
Apple Inc. was the absolute highlight last week, with the world’s most-valuable company unveiling plans for a $90 billion buyback as it reported quarterly financial results.
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