US equity market activity by foreign investors, households, mutual funds, and pension funds ended 2019 as net sellers while corporation’s buybacks are estimated to exceed $480 billion – just in the S&P 500 companies. This source of market growth cannot be counted on to prop up the equity markets in the future.
As for the effect of share repurchases on equity prices today, there is little doubt that they are helping fuel earnings-per-share growth during a period when corporate profits are in decline. Earning-per share at S&P 500 companies are on pace to decline by 0.7% in the third quarter, according to data from Refinitiv, but overall net income is set to fall by a larger 2.9%. In the fourth quarter, EPS is projected to rise 0.8% even as net income falls 1.5%.
The S&P 500 is up over 15% over past 6 months.