Goldman Sachs sees more buybacks, IPOs over the coming weeks and months

Investors have the opportunity to increase their stock exposure, considering that the recent dip in equity allocation is expected to be temporary, according to Goldman Sachs strategists.

He suggests that this temporary setback will endure only if the U.S. economy’s trajectory toward a soft landing continues.

Various data points provide additional confirmation that disinflation is already underway. Furthermore, perceptions of recession risk among investors are disappearing, as robust economic growth data persist.

Goldman’s IPO Barometer indicates an increasingly favorable backdrop for IPO activity within the macro landscape. Moreover, buybacks could also ramp up in the coming weeks.

“With the end of the 2Q earnings season, most companies have emerged from their blackout periods, suggesting equity demand from buybacks may increase in the coming weeks. According to GS Buybacks desk, 95% of S&P 500 companies have exited their blackout windows,” analysts wrote in a client note.

“August has historically been the strongest month for buyback executions and this month appears no different: The desk reports that executions so far in August have registered about 40% above the average 2023 level.”