U.S. Buyback Market Support May Wane in 2019

U.S. companies' shopping spree for their own shares helped put a floor on market declines in 2018. Don't look for the same level of support in 2019.Wall Street's recent volatility has optimists betting that buybacks could provide the market with an even better buffer in 2019. But many strategists see the lift from buybacks - a major factor behind the bull market - losing some force as earnings growth slows while tax policy bonanzas fizzle out."Companies bought back around 2.8 percent of shares outstanding in 2018. That was a substantial support to the market and bigger than dividends," said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago."(In 2019) we expect the corporate firepower behind share buybacks to be diminished. The growth in cash flow will be slower."Last year will likely go in the books as a record for buybacks. Through the first three quarters of the year companies bought $583.4 billion of their own stock, just shy of 2007's full-year record of $589.1 billion, according to S&P Dow Jones Indices data.But even that was insufficient to prevent 2018 ending with a resounding thud for U.S. stocks as the S&P 500 <.SPX> tumbled nearly 20 percent from its late-September high, although it probably prevented losses from being even deeper. For the year, the index fell 6.2 percent, its poorest showing in a decade.Strategists say U.S. companies will spend heavily again on their own shares in 2019 as they have plenty of cash and tend to favor buybacks over dividends and major capital investments in times of economic and policy uncertainty.Goldman Sachs has forecast a 44 percent jump in buybacks to $770 billion for 2018, with growth slowing to a 22 percent rise to $940 billion for 2019.