--- title: 'What are stock buybacks & how do they work?' source: 'https://www.youtube.com/watch?v=6pyjtsHpgQM' video_id: '6pyjtsHpgQM' date: 2026-09-15 duration_sec: 258 channel: 'Yahoo Finance' --- # What are stock buybacks & how do they work? > Source: [What are stock buybacks & how do they work?](https://www.youtube.com/watch?v=6pyjtsHpgQM) ## Summary This video from Yahoo Finance's 'Stocks in Translation' analyzes the current state of the stock market, focusing on the fading stock buyback bid as a key support mechanism. It explains the concept of buybacks, the seasonal blackout window, and how this timing, combined with historically weak September and volatile October, suggests a period of caution despite record highs. ### Key Points - **Record Highs and Market Context** [00:00] — Major indexes are near record highs, including the small-cap Russell 2000. The S&P 500 has added $16 trillion in market cap since April lows. The Fed is cutting again, and while an earnings season is beginning, one of the biggest supports for stocks—the buyback bid—is fading. - **What Is a Stock Buyback?** [00:28] — A stock buyback is when a company uses cash to buy its own shares in the open market. This can lift earnings per share, support the stock price, and offset employee stock compensation. It is legal and common, but does not guarantee gains. - **Buyback Announcements Tracking High** [00:57] — A J.P. Morgan chart shows buyback announcements in 2025 are climbing faster and higher than the three-year average. By September, announcements are already close to the trillion-dollar end-of-year average. However, these are announcements, not actual executions. - **Four Waves of Buyback Executions** [01:11] — A UBS chart of rolling five-day buyback executions shows four distinct waves per year, coinciding with the four earnings seasons. The dotted line indicates the current position and an estimate for the rest of the year. - **Buyback Blackout Window** [01:39] — Buybacks have recently dropped off steeply because we are now in the buyback blackout window—a quiet period before earnings when companies pause repurchases to avoid trading while holding non-public earnings results. Some companies run a small autopilot, but overall demand drops. - **Blackout Window Nearing Peak** [02:15] — A Goldman Sachs chart shows the number of S&P 500 companies in the blackout window. The dotted line indicates we are close to the peak, which extends into mid-October. This means the buyback bid is shrinking but should rebuild as earnings are released. - **September's Historical Weakness** [02:43] — A chart of median monthly S&P 500 gains since 1990 shows September is the only month with a negative median gain. This aligns with when the blackout window widens. October, while better on average, has historically seen crashes and volatility spikes. - **Recap: Less Cushion, Bigger Swings** [02:58] — We are at record highs, the Fed is easing, and earnings are ahead, but the buyback safety net is partially pulled back until results start rolling in. This means less cushion and potentially bigger day swings. - **What to Watch For Next** [03:21] — Buyback blackouts peak in mid-October then lift. Watch for the buyback bid to return as earnings season accelerates, companies updating repurchase plans, and spikes in the VIX volatility index (which tends to grow into September/October and usually signals weakness). Also watch long-term government rates—a big jump can hurt stocks, especially when buybacks are light. - **Bottom Line** [04:06] — For the next few weeks, the market's biggest consistent buyer is mostly on the sidelines, so caution is warranted even amid record highs. The podcast releases new episodes Tuesdays and Thursdays on Yahoo Finance's website and wherever podcasts are found. ### Conclusion The market's biggest consistent buyer is on the sidelines during the buyback blackout, so expect less cushion and potentially bigger swings in the near term. Watch for the buyback bid to return as earnings season accelerates, and monitor the VIX and long-term rates for additional signals. ## Transcript We've got the major indexes sitting near record highs, even the small cap Russell 2000. The S&P 500 alone has added $16 trillion in market cap since the April lows. And meanwhile, the Fed is cutting again. An earning season is about to start, but one of the biggest supports for stocks is fading right now. The stock buyback bid. And that's what we're digging into on today's Stocks in Translation. First, a quick definition. A stock buyback or repurchase is when a company uses cash to buy its own shares in the open market. Fewer shares can lift earnings per share and also support the stock price. And it can also help offset any compensation paid to employees in stock. The buyback is a legal common tool, but it does not guarantee gains. The first chart that we're going to look at, courtesy J.P. Morgan, shows how stock buyback announcements have been tracking this year in white versus a three-year average in green. Notice how 2025 climbs faster and higher It only September and we already closing in on trillion which happens to be the end of year average Also important these are only announcements not actual buyback executions, which we're going to take a look at next. This next chart by UBS shows the rolling five-day buyback executions for 2025 in billions of dollars. Notice the rhythm. There are four separate waves per year, which coincide with each of the four earnings seasons. We're going to get to exactly why this is in a minute. Meanwhile, the dotted line shows where we are right now, and just to the right of it is an estimate for the rest of the year. Then if you look just to the left of the dotted line, you're going to notice how buybacks have recently dropped off quite steeply. This is because we are now in the buyback blackout window. This is a quiet period before earnings season when many companies pause share buybacks. They do this to avoid trading while they hold earnings results that are not public just yet. Some companies keep a small autopilot running which is perfectly legal but overall buyback demand it drops noticeably In this next chart from Goldman Sachs we going to zoom in on the current blackout window which tracks mid through mid The vertical axis tracks how many companies in the S&P 500 are in the window right now. The higher the number, the fewer the buybacks. And you can tell from the dotted line showing where we are right now that we're getting close to the peak, which extends into mid-October. This means the so-called buyback bid is shrinking, but should start building again as earnings results hit the tape and companies exit the window. The timing matters because September is historically the weakest month of the year. This chart shows the median gain or loss for each month in the year in the S&P 500 going all the way back to 1990. You're going to notice that only September tends to be negative. And remember, that's right about when the blackout window widens, which is right now. And although October is a good month for stocks on average, it's a month when historically we've seen a lot of stock market crashes and when volatility tends to spike. So just to recap we are at record highs right now the Fed is easing we got earnings ahead but the buyback safety net is partially pulled back until results start rolling in It just means a bit less cushion and bigger day swings Here's what to watch out for next. Remember that the buyback blackouts, they peak in mid-October. Then they lift. Watch out for the buyback bid to return as earnings season shifts into high gear. Then, as results roll in, you've got to pay attention to companies updating their share repurchase plans. And also watch out for spikes in the VIX volatility index, which tends to get bigger into September and October. A higher VIX usually means weakness in stocks. And also, you might keep an eye on long-term government rates. A big jump, they can take bites out of stocks and kind of hit them harder when buybacks are light. So the bottom line is, for the next few weeks, the market's biggest consistent buyer is mostly on the sidelines. So a little caution is warranted as we celebrate all these record highs. And tune in to the next Stocks and Translation, the podcast, for more deep dives into markets. New episodes can be found Tuesdays and Thursdays on Yahoo Finance's website or wherever you find your podcasts.