Goldman Sachs: "The biggest buyer" returns to the market, with a trillion-dollar "ammunition" to help the US stock market through May and June

After the Federal Reserve signaled its readiness to keep interest rates high for a long time, investors are hoping that large-scale share buybacks by US companies will support the performance of US stocks.

On Wednesday, Goldman Sachs pointed out that as the largest buyers of US stocks, US companies have returned to the market and are expected to drive the next phase of growth in US stocks.

Goldman Sachs strategist Scott Rubner stated in a report to clients that US companies are expected to repurchase $934 billion worth of stocks this year, a 13% increase from last year, with an estimated one-sixth, about $155.5 billion, to be executed in May and June.

Rubner further noted that so far this year, US stocks have seen repurchases worth over $550 billion authorized, the third highest on record, with repurchase volume completed in the first quarter increasing by 21% compared to the same period last year.

Among the companies leading the wave of buybacks this year are tech giants:

Apple announced last week that its board approved a $110 billion stock buyback, making it the largest stock buyback in US history, leading to a nearly 4% single-day surge in Apple's stock price, the largest single-day increase in 18 months.

Previously, Google's parent company Alphabet launched a $70 billion buyback plan, while Meta also introduced a $50 billion buyback plan.

Goldman Sachs analyst Vani Ranganath added:

Just last week, 46 stock buyback plans were authorized, totaling $144.5 billion. The trading volume on Goldman Sachs' trading desk last week was 1.4 times the average daily volume since 2023, and 70% higher than the volume in the same period in 2022, with trading biased towards financials, industrials, and non-essential consumer goods.

As companies enter the open trading window after releasing earnings reports, the buyback wave may intensify. Goldman Sachs pointed out that approximately 92% of companies are expected to be in the open trading window this week, and the buyback wave is expected to continue until June 14.

It is worth noting that analysis suggests that buybacks often act as a "cushion," as the likelihood of a collapse is very low due to companies hoarding trillions of dollars in cash. Buybacks will also provide enough momentum to push the stock market to new highs in the short term.

In addition to the buyback factor, Rubner also listed many other bullish factors, including momentum traders and retail investors preparing to buy stocks becoming more active in the summer. Commodity Trading Advisors (CTAs) use the dynamics of asset prices by making long and short bets in the futures market, and their models indicate that regardless of market direction, CTAs will be buying stocks next week