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A handful of large firms have risen recently after repurchase pledges.
Shares of several U.S. companies have rallied following recent
announcements of increased share repurchases, a welcome development for
investors bruised by recent market volatility.
Facebook, Mastercard, Lowe’s, AbbVie and United Rentals are
among the companies that have unveiled bigger or resumed stock buybacks
this month as the S&P 500 heads toward its worst quarter since 2011.
Buybacks make corporate profits appear stronger by lowering the number of shares outstanding, buoying per-share earnings even without overall profit growth.
Corporate demand can also lead to stock-price gains.
Analysts credit record buybacks for helping lift major indexes during the latest leg of the bull market.
S&P 500 companies spent a record amount on buybacks in the third
quarter, with the total at roughly $200 billion, according to S&P
Dow Jones Indices.
“Corporations have been a large, incremental buyer. That’s had a very
large impact on equity market returns over the last few years,” said
Wasif Latif, head of global multiasset investing at USAA Asset
Management. “It seems like that large upward pressure is going to
continue to be there.”
Facebook has risen 5.5% this week after the social-media company said it approved a plan
to boost its buyback program by $9 billion. The advance has helped the
company pare some of its recent slide, though anxiety about slowing user
growth and heightened regulations has still sent Facebook’s stock down
18% for 2018.
Lowe’s and United Rentals have also trimmed some of their year-to-date
declines since their buyback announcements earlier this week. Mastercard
shares have fallen since the firm’s latest repurchase commitment amid changes to the credit-card company’s fee structure for merchants. The stock is still up 31% this year.
And drugmaker AbbVie rebounded from its lows of the day Thursday after
it revealed an increase to its buyback program during afternoon trading.
Although analysts say buybacks can give shares a short-term boost, some are concerned
that companies prioritizing spending on repurchases rather than
investing in their businesses could contribute to an expected pullback
in economic growth.
Some companies have cited uncertainty
about tariffs as a factor affecting spending decisions, slowing down
the pace of spending on equipment, factories and other capital goods
even with the U.S. economy doing better than it has in years by many
“That still hasn’t been sustained enough to give corporations the
confidence to invest in real projects, so they continue to do stock
buybacks,” Mr. Latif said.
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Natural-gas inventories fell by 77 billion cubic feet in the week
ended Dec. 7, government data showed Thursday, less than analyst
forecasts for a 85 bcf drain but still enough to leave stockpiles in the
U.S. about 20% below their five-year average. Natural gas edged down
0.3% Thursday but is still up 40% for the year and one of the market's best-performing assets in 2018.
The S&P 500 has moved less than 1% on a closing basis in four consecutive sessions for the first time since Oct. 9.
Shares of Canadian cannabis company Tilray have fallen 25% to $75.52 this week, bringing them 65% below their September peak on a closing basis. The stock is 75% off its intraday high of $300.
European Union leaders meet to discuss Brexit, budget, migration and other issues.
U.S. retail sales for November, out at 8:30 a.m. ET, are expected to rise 0.1% from the prior month.
U.S. industrial production for November, scheduled for 9:15 a.m., is expected to rise 0.3% from a month earlier.
Markit's U.S. flash manufacturing index for December,
slated for 9:45 a.m., is expected to inch down to 55.0 from 55.3 at the
end of November. The flash services index is expected to slip to 54.5
The Baker-Hughes rig count will be released at 1 p.m.
Once the most valuable U.S. company, General Electric’s complex
restructuring has raised questions about the firm’s true worth with
investors pummeling its stock and bond prices recently. PHOTO: RICHARD
GE shares rebounded after an upgrade from JPMorgan. Battered shares of General Electric flirted with their best day since 2009 and rose 7% after one of the company’s biggest skeptics said he thought the stock was near a bottom.
What does $3 trillion buy in Europe? Higher inflation and uneven growth. The European Central Bank’s bond-buying program, which it said Thursday it would wind down this month, weakened the euro and lifted prices, but its economic effects were modest.
BlackRock and Microsoft are building a retirement-planning platform.
The companies have agreed to develop a platform that will provide
digital financial-planning tools and new BlackRock funds offering guaranteed retirement income to employees through their workplace saving plans.
Saudi Arabia pumped up its stock market after bad news, including the Khashoggi murder. The government of Saudi Crown Prince Mohammed bin Salman has spent billions to counter selloffs in recent months following the killing of a dissident journalist, a corruption crackdown and a showdown with Qatar.
Economists scaled back their expectations for Fed rate increases. Private economists in a new Wall Street Journal survey dialed back their median forecast for 2019 rate rises, calling for two next year rather than the three they expected when asked last month.
What We've Heard on the Street
“The fate of Brexit increasingly looks like it will be decided
dangerously close to the March 29 deadline—too close to give businesses
time to plan for anything but the worst.”