More than $1.1 trillion in buybacks set to pause in September

More than $1.1 trillion of announced buyback programs that had been active returned to open repurchase windows by Aug. 27, Citadel Securities calculated. Those windows are due to close for many firms as pre-earnings blackout periods begin in September, with blackout activity accelerating around Sept. 12.

Blackout periods block companies from buying shares ahead of quarterly reports. The restrictions do not force companies to sell stock; they only stop a predictable source of incremental buying that had been available during the summer.

Citadel also found that retail net buying on S&P 500 down days in September has historically been about half the all-month average since 2019, indicating a seasonal decline in retail demand for the month.

Neuberger Berman reported that S&P 500 companies repurchased a record $1.10 trillion of stock in the 12 months through June. The composition of those repurchases is shifting: the largest corporate buyers of artificial intelligence and data-center capacity cut buybacks by roughly 32% to $85 billion as they increased capital expenditures, while financial companies lifted repurchases to a record $287 billion.

Rebekah McMillan, an associate portfolio manager at Neuberger Berman, noted the “marginal buyer” of US equities has moved toward more cyclical and credit-sensitive firms. Buybacks from large technology firms with strong free cash flow have tended to be steadier, while bank repurchases are more exposed to swings in earnings, credit losses, regulatory changes and capital requirements.

Long-term Treasury yields have risen recently, with the 10-year moving toward about 4.8% as investors weigh inflation, higher oil prices and expectations for tighter Federal Reserve policy. Evercore ISI strategist Julian Emanuel warned that a 10-year yield at or above roughly 4.75% has historically been “noxious to stocks” during the current bull market.

Market participants have rebuilt systematic buying capacity after July’s sell-off, and much of that capacity has already been deployed. Neuberger Berman also noted that the reduction in share counts that supported some of the largest index constituents is fading even as repurchase support spreads more broadly across other companies.

The timing of scheduled buyback pauses coincides with the regular seasonal weakness in retail buying and with already-deployed systematic flows, narrowing the set of predictable buyers available to absorb market moves during September.