US corporate buybacks have totaled close to $2 trillion since 2013 which has provided significant support to US equities. Now it appears the pace of buybacks is beginning to slow. According to JP Morgan Quant Marko Kolanovic, announced buybacks have dropped 40% ($250 billion) on a 12-month trailing basis. Share buybacks take approximately 6 quarters to execute so the recent drop will translate into roughly $40 billion less equity demand per quarter.
The market has not experience the buyback slowdown yet, however going forward the divergence between buybacks and the S&P500 is an increasing area of risk, see the chart below.
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