Important buying pressure in the US stock market has shrunk! US corporate stock buybacks hit a new low since the pandemic in March
In March, the total amount of stock buybacks announced in the United States was $39.1 billion, the lowest level since October 2020 and the lowest level for March since 2019, indicating that companies are starting to hoard cash due to concerns about the impact of economic growth and global trade conflicts
The amount of stock buybacks announced by American companies last month hit a new low since the pandemic, which may be an early sign that companies are starting to hoard cash due to concerns about economic growth and the impact of global trade conflicts.
According to Birinyi Associates, the total amount of stock buybacks announced in the U.S. in March was $39.1 billion, the lowest level since October 2020 and the lowest for March since 2019.
This is a worrying signal for U.S. stock investors, as stock buybacks have been one of the important pillars supporting the U.S. stock market. Currently, U.S. stocks have significantly retreated from the historical highs reached in February.
Jeffrey Yale Rubin, president of Birinyi Associates, stated, "No one knows what the tariffs will actually do, so how can corporate executives plan cash flow? Rather than cutting dividends, it’s better to slow down buybacks until they have a better understanding of the trade outlook."
Analysts point out that the weakness in the new round of stock buyback plans reflects a decline in corporate executive confidence. Moreover, considering that the Federal Reserve has signaled it will not cut interest rates until inflation cools further, corporate buybacks may need to become active again to support a rebound in U.S. stocks.
After a cautious phase of stock buybacks, American companies resumed large-scale buybacks in 2024, with the total buyback amount reaching the second-highest level in history for the year. This wave of buyback enthusiasm is mainly attributed to better-than-expected earnings performance and improvements in operating profit margins.
However, the tariff policies introduced by President Trump may drive up inflation and unemployment rates, posing significant challenges for American companies. Previously, companies had hoped to drive growth through tax cuts and deregulation, but with U.S. trading partners threatening retaliatory measures, the risk of escalating trade conflicts has made this year's outlook for U.S. stock buybacks highly uncertain.
The earnings season for U.S. companies is about to begin, which may provide the market with the first clues about this year's buyback trends
