How the Stock Buyback Bazooka Has Been Silenced by Virus

The effort to shore up U.S. businesses battered by the coronavirus pandemic has brought new attention to the single biggest investment most big companies have made over the past decade: their own stock. The defenders of share buybacks say it’s often the most efficient use of capital. Critics say it has left firms vulnerable to the kind of shock the virus has produced. Either way, it’s been a vital support for equities -- but one that will probably be sharply curtailed for a while, for both economic and political reasons.

The past two years have been the busiest on record, according to a report by S&P Dow Jones Indices. Companies flush with cash from a 2017 tax cut bought back a record $806 billion of shares in 2018, a figure that slipped to $729 billion in 2019. For members of the S&P 500 Index, buybacks have exceeded dividends in every quarter since 2010.