Companies are on pace to buy back a record $1 trillion in stock this year as Russia's war in Ukraine and the Fed's planned rate hikes rattle markets
- Buyback programs in 2022 are on track to hit a record $1 trillion, Goldman Sachs analysts found.
- So far this year, S&P 500 companies have announced repurchase programs worth $238 billion.
Companies are on track to repurchase an historic $1 trillion worth of stocks in 2022 in an effort to stave off market volatility stemming from the war in Ukraine and the Federal Reserve's planned rate increases.
Already this year, S&P 500 companies have announced plans to buy back shares worth $238 billion — putting 2022 on pace for its record total, according to Goldman Sachs analysts.
A stock buyback reduces the number of a company's shares available to trade. The tool often helps boost the price of an equity and even a company's financial metrics — an aspect that is often called into question by investors and regulators.
This year's buyback frenzy so far is up 12% from 2021, which saw a full-year record total of $911 billion, the analysts said. Buybacks, they added, "will continue to represent the largest use of cash for S&P 500 companies, followed by capital expenditures."
So far in March alone, Seattle-based Amazon announced a 20-for-one stock split and a repurchase program valued at up to $10 billion,
In February, Omaha, Nebraska-based Union Pacific said it would repurchase up to 100 million shares, valuing its stock buyback program at a whopping $25 billion. That same month, Pepsi set a $10 billion repurchase program along with chemicals company Linde Plc.
The current number of active buyback programs is about twice the normal average, according to Goldman's report.
That historic pace has come amid market turmoil stoked by Putin's forces launching an attack on Ukraine, which spurred widespread sanctions from the West, and by the Fed's plans to increase interest rates to combat the highest inflation in 40 years.
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