Sept 14 (Reuters) - Comcast Corp (CMCSA.O) and Johnson & Johnson (JNJ.N) on Wednesday unveiled buybacks worth billions of dollars as they joined a rush of U.S. companies seeking to avoid a new tax on such repurchases.
The $430 billion Inflation Reduction Act imposes a 1% tax on buybacks and a minimum 15% tax on corporations from next year.
Comcast doubled its share buyback authorization to a record $20 billion after increasing it to $10 billion in January, while J&J announced a repurchase program of up to $5 billion.
While the new tax will encourage companies to pull forward buybacks and increase repurchases in the near term, the weakness in equities markets is also a major reason, said Art Hogan, chief market strategist at B. Riley.
"When valuations are low and markets are down, companies tend to buy back their shares. So it's a reflection of where markets are," Hogan said.
The benchmark S&P 500 index (.SPX) has declined nearly 18% this year as runaway inflation spurs super-sized rate hikes from the Federal Reserve.
When the S&P 500 posted its biggest quarterly loss in two years in the first three months of 2022, buybacks hit a record $281 billion, according to S&P analyst Howard Silverblatt.
Silverblatt estimates buybacks in the second quarter to be around $220 billion, breaching the $1 trillion mark on a 12-month basis.
The fourth quarter would see a significant uptick, as companies planning for 2023 repurchases would prepone their plans due to the new tax, he said.
Shares in Comcast and Johnson & Johnson rose 1.7% and 2%, respectively.
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