US companies reopening the gates for stock buybacks will help the benchmark S&P 400 stock index increase by 5% to 4,700 by the end of the year.
- Goldman analyst, David Kostin states S&P 500 companies will buy back $726 million of their own stock this year. That figure would increase sharply from 2020’s figure, when the pandemic affected practice.
- Strong corporate equity demand is a major reason for forecasting a 5% return to S&P 500 year-end target of 4,700.
- The sharp rebound in buybacks supports the view that corporates will rank among the largest buyers of US equities.
- Kostin noted that the strength of share repurchases supports current stock valuations, irrespective of the prices reaching their highest levels relative to the company earnings in 40 years.
The S&P 500 closed at a record high of 4,468 on Friday, as US stocks bounded back significantly from last year’s pandemic-induced collapse, with the S&P expanding over 90% from lows recorded in March 2020.
S&P 500 down -0.34%, EUR USD down -0.14%Source: Markets Insider.