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Pace of stock buybacks slows sharply, Goldman says

|By:, SA News Editor

Stock buybacks by S&P 500 companies totaled $161B in Q2, down 18% from Q1 and down 17% Y/Y, Goldman Sachs reports in a note to clients.

Though Goldman expects the trend to continue, this year is still on track for the "second highest total on record."

"Early indications suggest second-quarter weakness in buybacks may persist," the bank wrote.

Sees 2019 total buybacks down 15% to $710B and down 5% in 2020 to $675B.

Buying back stock makes per-share earnings look better as the overall earnings figure is divided by a smaller number of shares; stock prices also often rise after buybacks also due to the lower number of shares outstanding.

Goldman sees the reduced pace of stock buybacks part of a larger trend of spending cuts due to trade uncertainty and slowing global growth.

In H1 2019, total cash spending fell by 4% Y/Y, says Goldman, which expects cash spending for the entire year to drop by 6%, making it the sharpest annual decline since 2009.

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