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At the beginning of last week, the fear of recession caused by poor U.S. non-farm employment caused a sharp drop in U.S. stocks. By the end of the week, U.S. stocks had recovered most of the losses. On Monday, August 12, U.S. stock indexes opened higher collectively. In the end, the S&P 500 and Nasdaq closed higher with the help of chip stocks.

Vani Ranganath, Goldman Sachs traderThe weekly report pointed out that this is because corporate stock buybacks are coming as "reinforcements" for US stocks.Currently, 90% of the S&P 500 components are in the open window period for repurchases, and this proportion is expected to rise to 93% by the end of this week, which means that almost all component companies can repurchase shares, and this open window period will last at least until September 6.

Active fund flow data from Goldman Sachs' corporate trading desk showed that the average daily trading volume (ADTV) related to stock buybacks in the week of August 5 to August 9 (last week) was 1.6 times the average daily trading volume so far this year, as high as 2.1 times so far in 2023, and 1.4 times so far in 2022. In addition, corporate stock buyback funds last week focused on the technology, financial and consumer discretionary sectors.

This shows that as the U.S. stock buyback window opened again, the buyback transaction volume began to double since last week.At the same time, the total amount of stock repurchases authorized by corporate boards so far in 2024 is $819 billion, an increase of approximately 14% from the authorized amount so far in 2023, which means that during the next repurchase window, the amount of corporate repurchases in the coming days will only be greater, and the flow of funds will be a short-term positive for the stock market.

Goldman Sachs technical expert Scott Rubner, who had previously accurately predicted the current stock market correction, also said today that as the selling pressure from systematic funds eases and listed companies increase stock buybacks,Investors will8There is a short window for bargain hunting in US stocks at the end of the month。

Rubner recommended at the end of June this year to reduce exposure to the U.S. stock market after July 4. He also reminded investors that after a certain point in September, the outlook for the stock market will deteriorate, and the market will not show a clear upward trend line in the fourth quarter and before the U.S. election in November.

Zerohedge, a financial blog known for its venomous tongue, said that last week's economic panic and the liquidation of yen carry trades caused trend-following CTAs (commodity trading advisors) to sell off U.S. stocks in large quantities, and systemic liquidations approached record levels, which also caused VIX to soar. "The only weapon to fight this bearish strong sell-off is that the corporate stock window is now open, and billions of dollars will be repurchased every day."

The analysis also mentioned that as long as the VIX, the "fear index" that measures the short-term volatility of the S&P market, is still trading around 20, the forced selling that occurred last week will continue, but the reduced volatility will keep the selling at a lower level. The VIX rose slightly to 20.71 on Monday. It soared nearly 200% to 65 last Monday, the highest level since the outbreak of the epidemic in March 2020.

In March this year, Goldman Sachs predicted that the scale of US stock buybacks will exceed $1 trillion for the first time in history in 2025, driven by strong earnings growth of technology companies and the loose financial environment brought about by the Federal Reserve's interest rate cuts. It is expected that the scale of stock buybacks by S&P 500 companies will increase by 13% to $925 billion in 2024 and 16% to $1.08 trillion in 2025. The uncertainty of the US election may prompt companies to postpone large-scale stock buybacks until 2025.