S&P 500 firms step up stock buybacks

BOSTON — Companies are using extra cash built up during the recession to repurchase stock, moves that are likely to please investors who see the value of their shares rise.

But the buyback surge may not please President Obama, who is urging companies to instead use surplus cash to hire more workers, hoping to generate jobs to sustain the economic recovery.

Standard & Poor's reported Monday that stock repurchases by S&P 500 companies more than doubled to $79.6 billion in the July-to-September period from $34.9 billion in last year's third quarter.

It was the fifth consecutive quarter of increasing buyback activity among the 500 largest publicly traded companies, many of them with substantial cash holdings built up during and after the recession that officially ended in mid-2009.

Stock buybacks indicate companies have enough cash to take their shares off the market, which increases the value of investors' remaining shares, and boosts per-share earnings results.

Buyback growth in the latest quarter "marks the full return of corporate participation in the equity markets," S&P analyst Howard Silverblatt said. "While we do not expect a return to the 2005-2007 buyback bonanza, we do see this as a strong, positive sign for the overall health of the market."