- Citi (C) analysts predict a $1 trillion stock buyback surge in 2025, an 11% rise from $900 billion in 2024, as a defense against market declines, with the S&P 500 (^GSPC) at 5,638 potentially dropping to 5,500 to trigger increased repurchasing.
- Companies like Apple, Alphabet, Nvidia, Wells Fargo, and Visa, which repurchased $190 billion in shares last year, may shift from the S&P 500’s 45% capital expenditure allocation toward the 30% buyback portion to bolster stock prices amid tariff uncertainties.
- Citi forecasts the S&P 500 reaching 6,500 by year-end, a 15% gain from 5,500, banking on enhanced corporate financial flexibility to counter correction risks and support an upward trajectory.
The stock market, currently hovering at 5,638 on the S&P 500 (^GSPC), faces a potential shield against further declines in the form of a $1 trillion stock buyback arsenal projected for 2025, according to Citi analysts led by US equity strategist Scott Chronert. This figure, as noted by BI, marks an 11% jump from the $900 billion companies shelled out in 2024, signaling a robust appetite among corporations to scoop up their own shares at discounted prices if the market dips further. Chronert posits that a drop to 5,500 – a 2.4% slide from current levels – could trigger a surge in repurchase activity, offering a critical support beam to stabilize prices amid the uncertainty swirling around the Trump administration’s tariffs and trade policies.
Historically, share repurchases have proven a savvy move for companies aiming to juice per-share value by shrinking the pool of outstanding units, a tactic that shines in tougher economic climates. Citi’s breakdown of S&P 500 cash allocation reveals a telling split: 30% flows to buybacks, 25% to dividends, and 45% to capital expenditures, but Chronert anticipates a pivot as market softness might nudge firms to redirect funds from capex to stock repurchasing. This shift could amplify financial flexibility, a buffer against the correction risks now pressuring equities, with heavyweights like Apple (AAPL), Alphabet (GOOG, GOOGL), Nvidia (NVDA), Wells Fargo (WFC), and Visa (V)—collectively responsible for $190 billion in buybacks last year—likely leading the charge on an absolute basis.
Looking ahead, Citi remains bullish, eyeing a year-end S&P 500 target of 6,500, which would deliver an 15% climb from the 5,500 threshold they flag as a buyback sweet spot. This optimism hinges on companies leveraging their repurchase power to counteract downward momentum, a strategy that could gain traction if policy turbulence persists. The interplay of these dynamics – market levels, corporate cash deployment, and macroeconomic headwinds – paints a picture of a market poised for resilience, provided firms seize the opportunity to buy low. With $1 trillion on the table, the buyback weapon could well dictate whether the S&P 500 weathers the storm or succumbs to it in 2025.
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