Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU

US firms are expected to use tax savings to buy back $800 billion of their own shares this year

$800 billion

Firms in the S&P 500 are expected to spend $800 billion buying back their own shares in 2018, up 50% from 2017, according to an analysis by JPMorgan Chase.

Published   |  Photo by Reuters/Rick Wilking
Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU
$800 billion

Buybacks theoretically make a company’s stock more scarce, boosting the price.

Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU
$800 billion

Critics say they rob money from wages and boost inequality. In the US, the wealthiest 10% own 85% of stocks (and the wealthiest 1% own 40% of stocks), so benefits to investors tend to go to those that are already rich.

Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU
$800 billion

Morgan Stanley said last month that companies will direct 13% of tax cut savings to workers—through wages, bonuses, and benefits—but 43% to investors—through stock purchases and dividends.

Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU
$800 billion

So far this year, companies have announced $60 billion in buybacks in January and $154 billion in February—the largest amount in three years.

Packs of U.S. one hundred dollar bills are counted at a bank in Westminster, Colorado November 3, 2009. Picture taken November 3, 2009.  REUTERS/Rick Wilking (UNITED STATES BUSINESS) - RTXQCOU
$800 billion

Tech firms, including Alphabet, Oracle, and eBay, account for the largest portion of buybacks. Cisco will spend $25 billion in share purchases, more than any other US firm so far this year.

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