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Stock market salvation: It's all about the buybacks

Buybacks could save stocks by year's end: Goldman

If the stock market isn't recovering under its own steam, expect corporate buybacks to help.

Goldman Sachs equity analysts say the corporate buyer has been missing during the downturn and should return at the end of the month. In a note, they said they expect the S&P 500 to bottom between 1,850 and 1,890 on a closing basis, before rallying to their year-end target of 2,050.

Helping that anticipated rally should be the fact that corporations do a big chunk of their buying for buyback programs in November and December. Most companies cannot buy stock in open market purchases in the five weeks prior to reporting earnings, and the start of that period coincided with the S&P 500 peak on Sept. 18, they added.

The stock market selloff, which took the S&P down 9.5 percent on an intraday basis, coincided with the absence of those corporate buyers.