It appears that corporate buybacks have started to slow.
S&P 500 companies spent $134.4 billion to repurchase their own shares in the second quarter according to FactSet, which might sound like a lot of cash, but represents a 6.9 percent drop from the first quarter. This as several companies, such as Pfizer and Verizon, slashed their buyback programs, and 12 fewer companies repurchased shares in the quarter.
Some say expectations around the Federal Reserve have a lot to do with the buyback decline. Even though the central bank elected to keep its benchmark rate near zero Thursday, fears of higher rates are causing companies to rethink their capital return program, posits Boris Schlossberg of BK Asset Management.
"Even though rates have not gone up, we clearly are in a tightening position in terms of monetary policy, and I think they're looking ahead and saying, 'Do I really want to finance this thing with no-longer-cheap money that we used to have a couple months ago?'" Schlossberg said Tuesday in a "Trading Nation" segment.
If the cost of borrowing does indeed rise, borrowing money to buy stock clearly becomes less attractive.