More Buyers than Sellers
US stocks declined on Friday as investors responded to the potential for additional tariffs from the Trump administration.
The S&P 500 and Nasdaq lost 0.9% and 1.3%, respectively, while the Dow Jones dropped 443 points.
The University of Michigan’s consumer sentiment report revealed that one-year inflation expectations surged to 4.3%, the highest since November 2023.
The January jobs report showed the US economy added 143K jobs, slightly below expectations, but the unemployment rate ticked down to 4.0%.
Amazon shares slumped 4% after issuing weak revenue guidance, overshadowing its strong quarterly earnings.
On Monday January 27, Nvidia depreciated -17% ($589 billion) in response to the announcement from China regarding the price/performance characteristics of their DeepSeek R1 AI engine.
On Monday February 3, the major market indexes depreciated by 1-3% on news that tariffs may be placed on imports from Mexico, Canada and China.
Investors bought the dips and the combination of strong buying pressure and lessening of the initial news shock stimulated market recovery. The S&P 500 is trading within 1% of its all-time high.
Retail investors are buying U.S. equities at a record pace. Four of the five largest buying days of all-time for retail stock buying have taken place in the past two weeks. The net imbalance between buy and sell orders ranges from $4-$5 billion per day. The strongest demand is for Nvidia, Tesla, Apple, Amazon, Microsoft, Advanced Micro Devices and Broadcom.
About 60% of the S&P 500 companies have their stock repurchase window open as of Friday. This week, the corporate stock buyback demand dynamic turns on in full force. Goldman Sachs projects that $1.45 trillion worth of stock buybacks have been authorised for 2025 – an all-time high.
When the stock buyback window is open (after the regulated amount of “blackout” time surrounding a quarterly earnings announcement), average corporate stock buybacks are $7 billion per day. Because of timing differences between corporate quarterly earnings announcements, the stock buyback window is never completely closed. When it is closed for most companies, average daily stock buy are $3 billion.
Why do stocks go up and down? Sometimes, the best answer for why they go up is there are more buyers than sellers.
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