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SURGING BUYBACKS POINT TO MORE BULLISH STOCKS OUTLOOK

Stock buybacks surged late last week even after some companies including General Motors GM.N said they were freezing their buyback programs.

This may mean any further pullbacks in stocks will be shallower than were previously likely, according to Brian Reynolds, chief market strategist at Reynolds Strategy.

Reynolds notes that buyback announcements increased by $119 billion last week, which is 25% above the pace that was seen during the month-long post-election surge from November to December. “We were stunned by the size and rapidity of the buyback surge,” he said.

A more positive outlook on tariffs, in which “the sentiment of investors seems to be that the tariff threat will not get worse and could potentially get less worse,” is also improving the stock outlook. This can be seen, for example, with Apple AAPL.O on Monday launching a giant bond deal to help fund buybacks.

As a result, Reynolds now thinks that the S&P 500 .SPX testing levels below 5,000 “are much less likely than they were two weeks ago.” At the same time, “we want to be a more aggressive buyer of the 5400 area than we were two weeks ago."

Reynolds now expects the 5,800 level to be reached sooner than previously thought, which is then likely to prompt bearish investors to chase the market, which will eventually lead to new highs. The S&P 500 .SPX is now around 5,670 on Monday.

(Karen Brettell)

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MONDAY'S EARLIER LIVE MARKETS POSTS:

SERVICES WITH WINCE: ISM AND S&P GLOBAL SERVICES PMI CLICK HERE

US STOCKS TRIPPED UP BY MORE TARIFFS - CLICK HERE

AI, HUMANOIDS AND THE NEXT TRILLION-DOLLAR TECH RACE CLICK HERE

MOMENTUM MAKES A MOVE CLICK HERE

WHAT TO EXPECT FROM GERMANY'S NEW CHANCELLOR CLICK HERE

GRAPPLING WITH "DISTORTED AND CONFUSED" MACRO SIGNALS CLICK HERE

EARNINGS MISSES PUNISHED BY MOST IN 20 YEARS CLICK HERE

EUROPEAN SHARES MIXED, ENERGY LAGS CLICK HERE

EUROPE BEFORE THE BELL: FUTURES NUDGING HIGHER CLICK HERE

TAIWAN DOLLAR LEAPS; BUFFETT TO STEP DOWN CLICK HERE