Dec 23, 2018

Buybacks on stock market hits record level

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Data: S&P 500; Chart: Harry Stevens/Axios

The stock market decline comes despite a record level of buybacks — more than $200 billion in the last quarter alone, up some 58% from a year ago.

Why it matters: It's a lot easier for companies to reduce buybacks than it is for them to reduce dividends. If and when earnings start to decline, it should be quite easy for buybacks to fall in tandem.

  • Buybacks are rising mainly because companies have been very cautious about raising their dividends. If you look at the level of dividends and buybacks combined, it tracks very closely with total corporate earnings, which have been growing impressively.
  • In 2007 and 2015, earnings fell below the amount that companies were spending on buybacks and dividends. That's no longer the case.

Go deeper

The S&P 500 could be overvalued

The New York Stock Exchange on Jan. 8. Photo: Xinhua/Wang Ying via Getty Images

The S&P 500 is too rich on a number of levels, according to calculations in a new paper from Ned Davis Research that examines the index's price to earnings, profits and price to sales.

What's happening: Not only is the benchmark stock index's current P/E ratio "well above fair value," S&P companies' prices relative to sales is at a record high, “well in excess of what they were in 2000 or 2007 at those peaks,” Ned Davis, the company's senior investment strategist, says in a note to clients.

Go deeperArrowJan 9, 2020

Cigna's big divestiture on its life and disability insurance business

Photo: Julia Rendleman/Getty Images for Eventive Marketing

Cigna finally pulled the trigger on selling its life and disability insurance business, netting $5.3 billion after taxes from New York Life.

The big picture: Health insurers have been divesting products that have less to do with actual medical care and instead combining with companies that sell drug benefits

Go deeperArrowDec 19, 2019

Middle East tensions could spark a big year for defense stocks

Data: Money.net; Chart: Axios Visuals

Defense sector stocks have predictably seen major buying since the killing of Iran Gen. Qasem Soleimani, in particular Northrop Grumman and Lockheed Martin.

Why it matters: The gains may not be temporary, analysts say.

Go deeperArrowJan 8, 2020