U.S. corporations are forecasted to repurchase a record $1 trillion of their own stock in 2025, continuing their dominant role as the largest buyers of U.S. equities. According to Scott Rubner, the head of equity and equity derivatives strategy at Citadel Securities, these corporate buybacks are expected to bolster the stock market, providing stability and supporting valuations in the face of other economic uncertainties.
Corporate buybacks have become a significant trend in the market, especially since 2018, when tax reforms allowed companies to repatriate foreign earnings and reinvest in their businesses, including through stock repurchases. In 2025, with corporations sitting on high cash reserves and stock prices remaining attractive, buybacks are projected to maintain momentum. These repurchases are particularly crucial as they represent a major source of demand for equities, especially when traditional institutional investors may be taking a more cautious approach amid mixed earnings reports.
Impact on Stock Market Valuations
Corporate buybacks help support the broader stock market by reducing the number of outstanding shares, thereby increasing earnings per share (EPS) for remaining stockholders. This can drive up stock prices in the short term, and according to analysts, could continue to play a pivotal role in lifting overall market performance in 2025.
The U.S. stock market has experienced steady growth so far this year, with both the S&P 500 and Nasdaq hitting record highs by mid-July. Citadel Securities’ Rubner highlights that these buybacks will act as a counterbalance to any external economic challenges such as rising tariffs, inflation concerns, or low earnings expectations.
Furthermore, with the earnings blackout period for most companies ending in August, Rubner anticipates that the repurchase activity will pick up again, particularly in sectors with robust balance sheets, such as technology, healthcare, and consumer goods. This could provide further upward pressure on stocks, potentially extending the current bull market.
Seasonal Trends and Retail Investor Engagement
July has historically been a strong month for U.S. stock performance, and this year appears no different. The S&P 500 is up by over 6% year-to-date, bolstered by strong earnings reports, particularly in the tech sector. Notably, retail investors, who have shown a renewed enthusiasm for the market, are actively participating. Citadel’s data shows that there has been a 14-day streak of net buying by retail investors, the longest since December 2024, indicating a strong retail presence despite market volatility.
Rubner’s comments further suggest that retail participation will remain a strong force in driving stock market rallies, especially if favorable conditions persist. He compares the current market scenario to a baseball game’s “7th inning,” hinting at the potential for additional upside in the second half of the year as corporate buybacks continue to support stock valuations.
Conclusion: A Robust Investment Environment
With the combination of corporate buybacks, strong seasonal trends, and sustained retail investor activity, the U.S. stock market is poised to benefit from these factors throughout the remainder of 2025. While there remain risks, including the potential for slower earnings growth, corporate repurchases continue to act as a market stabilizer. For investors, the coming months represent an opportunity to closely monitor these dynamics, as companies prepare to report their earnings and execute their buyback plans.