According to the analysis by S&P Dow Jones Indices specialists of corporate reports of American companies from the S&P500 index, referred to by The Wall Street Journal, major US businesses are ramping up capital investment allocations (CAPEX) at a record pace. It is noted that for the first time since the first quarter of 2021, the amount of funds allocated to CAPEX exceeded the amount of funds allocated by companies to buy back their shares from the market (buybacks).
After analyzing the reports already published for the second quarter of approximately two-thirds of the companies included in the S & P500, experts calculated that $ 149.8 billion was allocated to CAPEX – this is 20% more than a year earlier. At the same time, the volume of funds allocated for buybacks increased by only 10% from last year, to $160.8 billion, and for dividends, by 14%, to $140.6 billion. about the confidence of companies in the future development, led to the fact that the US stock market reacts rather calmly to the corporate reporting season in the current environment of growing geopolitical instability and inflation.
The growth of capital investment is observed in a variety of sectors – from high-tech to industrial and consumer goods production. So, Alphabet (Google’s holding company) in the second quarter allocated $6.8 billion to CAPEX, while a year earlier – $5.5 billion. Automaker GM – $2.1 billion, and a year earlier – $1.5 billion, Pepsi – $1. .5 billion, a year earlier – $1.3 billion.
“If we continue to see corporate reports showing CAPEX costs rising, companies are pretty optimistic about the immediate future of their operations,” Victoria Fernandez, director of strategic investment and portfolio manager at Crossmark Global Investments, was quoted by the WSJ as saying.