Shares were little changed after the record-setting week

Stock buybacks are increasing in a sign that companies are feeling better about the path of the US economy.

Companies like Meta (META), Disney (DIS), and Uber (UBER) have announced plans to buy back stock this earnings season. According to data from Deutsche Bank, companies are acting on these buyback mandates, with S&P 500 members repurchasing $63 billion worth of their own shares during the first week of February, the highest total of repurchases in a single week since May 2023.

Parag Thatte, director of global asset allocation and US equity strategy at Deutsche Bank, explained to Yahoo Finance that as earnings rise, buybacks often follow suit. This happens because as earnings improve, companies' free cash flow often increases. Businesses will first spend this money on paying down debt. The remaining funds are then often used to pay dividends, raise capital expenditures to reinvest in the company, and possibly repurchase stock.

Stock buybacks reduce the amount of total shares offered to the public, boosting investors' stake in the company and their share of any potential profits. It's seen as a positive for investors, but it's often the first thing cut when times are tough.

This means that the return of buybacks could be seen as a sign that companies feel they are in a stronger position than the last few quarters when buybacks reached a lull.

“They have not yet declared that everything is clear and that we may be completely slowdown-free,” That said. “But on the sidelines they say: ‘Yes, we are seeing signs or things are improving.’”