Kolanovic Says Stocks Rallying on Buybacks, Quant Selling Eases
- JPMorgan estimates buybacks tripled to $10 billion a day
- Fund rebalancing seen fueling equity buying after bonds surge
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Investors should buy stocks because the recent sell-off has prompted a surge in corporate repurchases and the risk of computer-driven selling is dissipating, according to JPMorgan Chase & Co. strategist Marko Kolanovic.
As the S&P 500 slumped 6% over six days through Monday, companies boosted share buybacks to almost $10 billion a day from $3 billion previously, the firm estimates. With stocks sinking and bonds rallying, the big gap in performance spurred a rotation to equities among funds that need to go back to preset asset allocation levels, Kolanovic says.