US corporates expected to buoy stock markets with buy backs, says Citadel Securities

Citadel Securities' Scott Rubner forecasts U.S. companies will repurchase $1 trillion in their own stock in 2025, making them the primary buyers of U.S. equities. This significant corporate buyback activity, resuming post-August earnings blackouts, is expected to drive further equity rallies and higher asset valuations, supported by favorable seasonal trends and sustained retail investor inflows, even as the S&P 500 and Nasdaq already sit at record highs.

Analysis

A forecast from Citadel Securities' head of equity strategy, Scott Rubner, projects that U.S. corporate stock buybacks will reach $1 trillion in 2025, positioning corporations as the largest buyers in the U.S. equity market. This significant capital inflow is expected to commence after the current earnings blackout period concludes in August, providing a substantial support mechanism for asset prices. The projection comes as the S&P 500 and Nasdaq have already posted year-to-date gains of 6.7% and 7.5% respectively, hitting record highs on July 15. The bullish outlook is further supported by strong retail investor participation, evidenced by a 14-day buying streak—the longest since December 2024—and historically positive July seasonality for the S&P 500. Despite this optimism, the analysis notes that large institutional investors are currently less active and that the market may be in the later stages of its rally, described as "inning 7 out of 9." Low earnings expectations for the current season could also set the stage for positive surprises, potentially fueling further upside.

Key Decisions for Investors

• Given the strong forecast for corporate buybacks resuming post-August and continued retail inflows, investors may consider maintaining or increasing exposure to U.S. equities to capitalize on these powerful market tailwinds.
• Monitor institutional flows closely, as their current sideline positioning could represent a key risk or, conversely, a source of future demand if they begin to participate in the rally.
• Be mindful of the seasonal patterns highlighted in the report; while July is historically strong, the explicit warning about September being the worst-performing month suggests a tactical approach to risk management may be warranted in the coming quarter.
• Pay close attention to the current earnings season, as low expectations create a low bar for companies to beat, which could serve as an additional catalyst for positive market sentiment.