Corporate America Is Set to Save Stock Market Rally, Goldman Sachs Says

(Bloomberg) — The biggest buyers of US equities, American companies, are back in the market and ready to drive the next leg of the stock market rally, according to Goldman Sachs Group Inc.

About a sixth of the $934 billion in estimated share repurchases this year are expected get executed in May and June, the firm’s ’s tactical specialist Scott Rubner wrote in a note to clients Tuesday. More than $550 billion worth of authorizations have already been done by companies so far this year, he added.

Goldman Sachs Sees Soaring US Buybacks | Trading desk expects $934 billion of corporate buyback executions for 2024

Buybacks have picked this year, with big tech at the forefront. Apple Inc.’s board approved an $110 billion in share repurchases, the company said last week, making it the biggest US buyback ever and sparking the best day for the company’s stock in 18 months. The announcement followed Google-parent Alphabet Inc.’s $70 billion buyback plan and Meta Platforms Inc.’s $50 billion program.

Investors are counting on these efforts to help sustain this year’s stock market rally as Federal Reserve’s signals that it’s prepared to keep interest rates higher for longer than expected to tame sticky inflation.

In addition, Rubner noted that US stocks are “heading into favorable seasonals.” He points to a multitude of bullish factors in addition to buybacks, including momentum traders poised to buy stocks and retail traders getting more active during summer.

Commodity trading advisers, or CTAs that surf the momentum of asset prices through long and short bets in the futures market, are modeled to buy stocks over the next week, no matter which way markets go.

What’s more, the potential demand for fixed income is also set to be “massive,” which is “what equity folks have been looking for to get back into Nasdaq” stocks, Rubner wrote.

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