US stock ownership nears record, will keep climbing

Households will be net buyers of $400B in equities in 2021: Goldman Sachs

Investors can’t seem to get enough of plain old U.S. stocks, and demand, already near an all-time high, shows no signs of slowing down as the S&P 500 sits at a record high. 

Ticker Security Last Change Change %
SP500 S&P 500 4423.15 +35.99 +0.82%

S&P 500 POSTS BEST WEEK SINCE FEBRUARY

"Households, foreign investors, mutual funds, and pension funds collectively own 91% of the US equity market," noted Goldman Sachs in a recent research note. "We forecast households will be net buyers of $400 billion in equities in 2021 driven by the buildup of cash in money market funds, anemic credit yields, and a rebound in retail trading activity," the team, led by David Kostin, detailed. 

Trading among the retail community has jumped, in part due to firms such as Robinhood, which in a recent campaign touted the ease of investing with just $1. 

The other component expected to drive stocks higher, according to Goldman, is buying from big business. "Corporations will be the largest source of equity demand for the remainder of 2021, as we expect buybacks to accelerate and issuance to slow from peak 1Q21 levels," Goldman said.

BANKS PASS STRESS TESTS WITH FLYING COLORS

Big banks could be among the more active buyers. Last week, the Federal Reserve reported 27 of the nation's largest banks passed its stress tests with flying colors, with banks, including JPMorgan, Wells Fargo and Bank of America, now holding more than double the average capital cushion required by the Fed to ensure the stability of the U.S. financial system and the ability to lend to both businesses and consumers. 

Ticker Security Last Change Change %
JPM JPMORGAN CHASE & CO. 152.89 +1.72 +1.14%
WFC WELLS FARGO & CO. 46.83 +1.04 +2.27%
BAC BANK OF AMERICA CORP. 38.55 +0.59 +1.55%

As a result, restrictions on buybacks and dividends will be lifted officially on June 30.

Bank of America CEO Brian Moynihan indicated to FOX Business last month that he plans to take action. 

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"We expect to increase our dividend and increase our share buybacks, because frankly, it’s simple, we’re making good money doing a great job for our customers and a great job for society and, therefore, our shareholders ought to benefit too, so that’s what we’ll do," said Moynihan on "Mornings with Maria" last month.