The stock market has a $1 trillion secret weapon to fight further declines

Matthew Fox

Mon, Mar 10, 2025, 3:33 PM 2 min read

• Stock buybacks could counteract extended marketplace declines, Citi said.

• The slope predicted $1 trillion successful banal buybacks by 2025, up from 2024.

• Companies whitethorn displacement spending from superior expenditures to buybacks amid Trump argumentation uncertainty.

The banal marketplace has a $1 trillion limb to combat further terms declines: banal buybacks.

Analysts astatine Citi said successful a Monday enactment that arsenic the banal marketplace continued to decline, it could contiguous a too-good-to-ignore woody for companies to bargain backmost their stocks astatine discounted levels.

"Should ample headdress US equities proceed to correct, we expect that stock repurchase enactment would increase, frankincense providing immoderate level of enactment to banal prices," Scott Chronert, a US equity strategist astatine Citi, said.

Share repurchases person historically been an ace successful the spread for companies looking to make banal gains during thin times, since reducing the fig of units outstanding boosts the per-share price.

Chronert estimated that successful 2025, determination could beryllium $1 trillion successful cumulative banal buybacks, which would correspond an 11% summation from the astir $900 cardinal spent connected buybacks successful 2024.

Of note, Chronert said, is that companies could statesman to displacement their spending distant from superior expenditures and toward banal buybacks arsenic the marketplace moved lower, particularly considering the uncertainty related to the Trump administration's tariffs and commercialized policies.

"While argumentation impacts whitethorn change the trajectory from here, we proceed to spot enhanced fiscal flexibility for galore companies with the S&P 500 arsenic a counterbalance to existent correction hazard successful the markets," Chronert said.

Here's the breakdown of S&P 500 companies' currency use: About 30% goes to banal buybacks, astir 25% to dividends, and astir 45% to superior expenditures.

Citi highlighted 5,500 connected the S&P 500 arsenic a compelling level of worth for companies to ramp up their banal buybacks. That level represents a further 3% diminution from existent levels.

The slope expects the scale to emergence to 6,500 by the extremity of the year, an 18% upside from the 5,500 level.

The S&P 500 traded astatine 5,691 connected Monday morning.

As to which S&P 500 companies are the largest buyers of their ain stock, Citi pointed to Apple, Alphabet, Nvidia, Wells Fargo, and Visa connected an implicit basis, which combined repurchased astir $190 cardinal worthy of shares past year.

Read the archetypal nonfiction connected Business Insider