U.S. stocks rose on Monday, with both the Dow and the S&P 500 ending at new records as technology shares rebounded from a recent bout of sharp weakness to lead the market higher.
The Dow Jones Industrial Average DJIA, -0.27% rose 144.71 points, or 0.7%, to 21,528.99, ending at its highs of the day, which represented both an intraday and a closing record. With the day’s move, the blue-chip average is up 8.9% so far this year.
The S&P 500 SPX, -0.06% gained 20.31 points to 2,453.46, a gain of 0.8%. The large-cap index, up 9.6% in the year to date, hit its own intraday record of 2,453.82 on Monday finished near that high.
The Nasdaq Composite Index COMP, +0.74% rose 87.25 points to 6,239.01, a gain of 1.4% that represented its biggest one-day point and percentage move since Nov. 7. The outsize move in the index was largely due to gains in tech, as the index is heavily weighted toward the sector. The tech benchmark is just about 80 points shy of its June 8 closing high.
Among the most notable tech gainers on Monday, Apple Inc. AAPL, +0.59% rose 2.9% in its biggest one-daDespite strong earnings and record levels of cash on balance sheets, large U.S. companies are spending less money on share repurchases, according to S&P Dow Jones Indices.
There were hopes that the slowdown in buybacks that began last year would pick up with the prospect of a tax overhaul in 2017.
However, it appears that a pickup in share repurchases by large U.S. corporations hasn’t materialized, possibly because executives lost faith in the prospect for significant tax measures being pushed through Congress in 2017.
Companies in the S&P 500 SPX, -0.06% spent $133.1 billion repurchasing their own shares during the first quarter of 2017, according to S&P Dow Jones Indices.
That is a 1.6% decrease from the $135.3 billion spent in the fourth quarter of 2016 and a 17.5% decline from the $161.4 billion spent in the same quarter of last year.
For the 12-month period ending March 2017, S&P 500 companies spent $508.1 billion on buybacks, down 13.8% from $589.4 billion for the prior 12-month period, which was an all-time high.
In previous years, stock buybacks reduced total share count, actively supporting earnings per share. In 2015, the S&P 500 EPS was flat, but would have been negative if it weren’t for buybacks reducing share count
Read: Wall Street sours on buyback ETFs as stock repurchases wane
The number of companies reducing their share count has been steadily declining, however.
Year-over-year share count reductions of at least 4% declined to 71 issues for the first quarter of 2017, compared with 93 for fourth quarter of 2016 and 139 for the first quarter of 2016, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, in a note.
Silverblatt said the slowdown in share-count reduction will cut into earning-per-share growth.
“Companies may need to make money the old fashion way—earn it,” Silverblatt said.
Financials stepped up their share repurchases in the first quarter, increasing expenditures by 10.2%, to $29.5 billion, the most of any sector, and accounted for 22.2% of all buybacks.
For the 12-month period ending March 2017, shareholder return (both dividends and buybacks) totaled $909.6 billion, a 6.7% decline from the record $975.0 billion for the 12-month period ending March 2016.
Judging by the record levels of cash, a decline in share repurchases is not due to cash constraints. Excluding financials, transportation and utilities, S&P 500 available cash and equivalent now stands at $1.496 trillion, surpassing the previous record of $1.487 trillion, set in the third quarter of 2016. The current cash level is 1.7 times greater than expected 2017 operating income.
According to Silverblatt, corporations continue to hoard cash, which is doing nothing but attracting outside attention.
“Corporations continue to have enough money to do almost anything—and choosing not to,” Silverblatt said.
y advance since February, while Facebook Inc. FB, +1.09% was up 1.5%. Among other major internet names, Amazon.com Inc. AMZN, +0.97% added 0.8%. The tech sector overall XLK, +0.56% rose 1.5% in its biggest one-day rise since December.
“Tech got beat up unfavorably over the past week or two, but as the group’s earnings remain strong, we expect buyers are coming in to take advantage of the depressed prices,” said Peter Lewis, a managing partner at Murphy Capital Management. “Tech valuations are probably nearly the high end of the band, but if earnings and merger activity keep going, that could bode well for the sector.”
nvestors are likely to keep tech stocks in focus this week, amid concerns the sector could start to drag down the broader market, given the Federal Reserve has indicated it will tighten policy and economic data have failed to inspire. That major indexes are trading near records at a time when data have painted a mixed picture of the economy.
“We are deeply concerned about the market’s valuation,” said Phil Davis, chief executive officer at PSW Investments, who said he was viewing the 5,600 on the Nasdaq as a key level, one that is about 2.3% below its Friday closing price. “If we fail to hold 5,600, then you will begin to see panic setting in as fund managers are forced to consider the reality of their overvalued holdings.”
Moves in tech also come as some titans of the industry, including Amazon’s CEO Jeff Bezos, Apple’s Tim Cook and Microsoft Corp.’s MSFT, +0.51% CEO Satya Nadella, met with President Donald Trump at the White House to discuss updating federal computer systems and preventing cyberattacks, among other tech matters.
Stocks to watch: Shares of Boeing Co. BA, +0.42% rose 1.3% after the aircraft maker said more than 10 customers have committed to buying its 737 Max 10 airplanes. It made the announcement at the 2017 Paris Air Show on Monday. Among the orders, General Electric Co.’s GE, -1.24% plane-leasing unit GECAS, signed an order for 20 of the planes.