There have been plenty of catalysts supporting the broader market’s recovery from the correction lows seen in April and May. Oversold conditions, driven by indiscriminate selling, left the S&P 500 with washed-out market breadth and a much-needed reset of its elevated valuation levels. First-quarter earnings season turned out much better than expected, with most companies refraining from lowering forward guidance. President Trump’s announcement of a 90-day pause on most reciprocal tariffs helped ease fears of an escalating trade war, while continued progress in trade negotiations further fueled the risk-on rally. Steady retail buying and a gradual return of institutional demand also contributed to the rebound. One of the less-discussed but impactful drivers has been corporate buybacks, which likely provided an additional tailwind to the market’s quick recovery.

Corporate buybacks, as the name suggests, occur when a company purchases its own shares either from the open market or directly from shareholders via a tender offer, effectively reducing the total number of shares outstanding. Companies typically initiate buybacks when management believes the stock is undervalued. These programs are often funded through excess cash, retained earnings, or debt issuance—especially when interest rates are low. Beyond potentially boosting a stock’s performance, a reduced share count can improve key financial metrics, such as earnings per share (EPS) and return on equity (ROE). Companies have flexibility in the timing and execution of these buybacks; however, the Securities and Exchange Commission (SEC) prohibits repurchases during a “blackout period”—typically a few weeks before earnings announcements or the release of other material non-public information.

So far this year, the largest volume of buyback announcements has come from the communication services ($210 billion), financials ($200 billion), and technology ($196 billion) sectors. Sectors with the lowest levels of announced buybacks include energy, materials, real estate, and utilities. With a strong pipeline of authorized buybacks and the market falling into correction territory in March, it was no surprise that corporate America stepped in during Q1. Apple (AAPL), Meta Platforms (META), Alphabet (GOOGL), and NVIDIA (NVDA) were the most active, executing nearly $73 billion in total repurchases. Major banks also participated, with JPMorgan (JPM) and Bank of America (BAC) repurchasing nearly $18 billion combined. Historically, companies that engage in buybacks have outperformed their peers over the past 25 years—a trend savvy investors tend to watch closely.

Now that the market has rebounded, corporate executives may be hesitant to buy back shares at current levels. We thought a education on who steps in to buy during market downturns might offer some insight—and help you better understand how various forces shape the investment landscape.

-Mark & Elise

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