How much of a stimulus did the economy receive from the 100’s of billions in tax cuts corporations received? Reuters/Yahoo reports that U.S. companies used the money to go on a shopping spree for their own stocks to raise their own share prices.

These stock buybacks were a major factor behind the 2018 bull market. “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. 2018 will 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.

Strategists say U.S. companies spend heavily on their own shares 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.

After rushing home some $295 billion of foreign profits in the first quarter of 2018, the pace of repatriation by U.S. multinationals has since slowed sharply, Commerce Department data shows. In the third quarter that was down to about $93 billion. About $190 billion, or about a third, of repatriated funds were used on buybacks in the first three quarters of 2018, JPMorgan strategist Nikolaos Panigirtzoglou wrote.

FEEDING THE BULL

Buybacks have been a major support to the bull market that began in March 2009. S&P 500 companies bought roughly $4.5 trillion worth of their own shares, equal to about a third of the benchmark’s $15 trillion gain in value over that time, according to Audrey Kaplan, head of global equity strategy at Wells Fargo in New York. Datatrek Research said U.S. companies tend to spend between 40 percent and 60 percent of operating income on buybacks and only breach the low end in “the direst times.”