Investors bailing on stocks amid mounting recession fears may want to consider the buying spree from those who are in charge of American businesses.
Starbucks’s interim chief executive officer Howard Schultz is among corporate insiders who scooped up their own stock amid the latest market rout that took the S&P 500 to the brink of a bear market.More than 1100 corporate executives and officers have snapped up shares of their own firms in May, poised to exceed the number of sellers for the first month since March 2020 marked the pandemic trough two years ago, according to data compiled by the Washington Service.
The success of any dip buyers right now arguably comes down to how much faith to put in expected earnings. Should existing predictions come true, SP 500 companies will earn a combined $US248 a share next year. Based on that, the index trades at roughly 16 times profits -- cheap by historical standards. An implication of the buying binge may be that officers and directors are confident they can deliver profits even as the Fed taps the brakes on the economy.
Whatever the reason, the prevailing sentiment appears to be that the worst is not over for stocks with lingering threats from the Fed, snarled supply chains and renewed COVID-19 lockdowns in China.