US Companies Set to Boost Stock Purchases to $625 Billion, Matching Mutual and Pension Fund Sales

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Goldman Sachs forecasts a significant increase in US corporations' investments in domestic equities, reaching a six-year peak of $625 billion this year. This surge is expected to match the combined sales from mutual funds and pension houses. The main catalysts for this uptick in corporate equity demand include a notable rise in share buybacks and a steady expansion in cash mergers and acquisitions (M&A).

Earlier in March, predictions from the Wall Street giant indicated a 13% increase in S&P 500 companies' share repurchases, aiming for $925 billion this year and potentially exceeding $1 trillion in the following year. However, Goldman also warned that new equity issuances might partially counterbalance these purchases.

Mutual funds and pension funds are projected to sell off $300 billion and $325 billion in stocks, respectively, on a net basis. The shift away from actively managed funds towards passive index funds and ETFs is driving mutual fund outflows. Simultaneously, pension funds are reallocating capital to less risky assets, such as bonds, in anticipation of market shifts.

Political uncertainties surrounding the upcoming Presidential elections in November are expected to influence foreign investment behaviors, with forecasts suggesting a $50 billion divestment from US stocks. This is a stark reversal from last year's $179 billion investment influx from foreign investors, highlighting concerns over domestic instability.

On the other hand, US households are anticipated to turn net buyers of domestic stocks, contributing an estimated $100 billion to the market. This marks a reversal from their previous net seller status in 2023. Despite possessing a record $3.8 trillion in money market assets, factors such as the continued appeal of credit and high equity allocations might moderate purchasing behaviors.


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.