Six months into 2023, S&P 500 companies are operating differently than they did a year prior.
As companies adjust their business plans to keep up with the economy, they spend more in some places while cutting drastically in others. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
The use of cash by S&P 500 companies will fall in 2023 after growing by 8% in 2022. The recent slowdown in earnings growth and the decline in cash balances will likely lead to a 2% drop in cash spending this year. S&P 500 companies are also unlikely to raise cash, as the cost of capital has risen sharply. Despite overall declines, firms are likely to up their spending of cash on research and development projects and shareholder dividends. Buybacks are expected to fall by as much as 15% this year before rebounding in 2024. Buybacks increased in the first quarter but at a slower pace than in 2022. A handful of firms were the biggest buyers of their own shares, including Apple (AAPL). Energy companies will lead the S&P 500 in share buybacks, followed closely by telecom firms.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
By contrast, companies in the financial, health care, utilities and real estate sectors will pull back spending on buybacks to increase capital buffers. Buybacks could face headwinds from a new excise tax and new regulations. The Inflation Reduction Act included a 1% excise tax on buybacks. Meanwhile, the Securities and Exchange Commission (SEC) has OK’d a rule requiring publicly traded firms to disclose more information on their buybacks, including the average share price paid.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Read more
-
Oracle Stock Is Sinking After Earnings. Here's WhyOracle stock is lower Tuesday after the tech giant fell short of earnings expectations for its fiscal second quarter. This is what you need to know.
-
Can Tariffs Make Childcare Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
-
Kiplinger Outlook: Telecom Companies Brace for Tough TimesThe Letter The telecom industry is entering a new era that threatens profitability. But the coming Trump administration will make it easier for the major players to adjust.
-
Start-ups Trying to (Profitably) Solve the World’s Hardest ProblemsThe Letter More investors are interested in companies working on breakthrough science to tackle huge societal challenges. The field of deep tech has major tailwinds, too.
-
The Big Questions for AR’s FutureThe Letter As Meta shows off a flashy AR prototype, Microsoft quietly stops supporting its own AR headset. The two companies highlight the promise and peril of AR.
-
China's Economy Faces Darkening OutlookThe Letter What the slowdown in China means for U.S. businesses.
-
AI Start-ups Keep Scoring Huge SumsThe Kiplinger Letter Investors continue to make bigger bets on artificial intelligence start-ups, even for small teams with no revenue. Some backers think a startling tech breakthrough is near.
-
Should We Worry About the Slowing U.S. EconomyThe Letter With the labor market cooling off and financial markets turning jittery, just how healthy is the economy right now?
-
New Phones Get All the Hype, but Consumers Still Love Old Models
The Letter Even as flashy artificial intelligence features drive sales of new smartphones, used phones continue to fetch big bucks as demand outstrips supply.
