Institutional Equity Exodus Meets Buyback Buffer in May

Large institutions accelerated their retreat from U.S. equities in May, offloading $50.8 billion worth of shares—a figure surpassing both April’s $30.9 billion outflow and the 12-month average of $42.7 billion. Analyst Thomas McNamara attributes the sell-off to a trifecta of risks: fresh tariff threats, recession anxieties, and Moody’s downgrade of U.S. sovereign debt.

Passive investors provided modest counterbalance with $11.1 billion in ETF and index inflows, though this fell short of their typical $30 billion monthly deployments. "Corporate buybacks became the shock absorber," McNamara observed, noting $170 billion in new repurchase authorizations that muted volatility. Defensive sectors like healthcare attracted capital while trade-sensitive industrials and semiconductors bore the brunt of selling.

Despite the tension between institutional flight and corporate demand, major indices remained remarkably stable—the S&P 500 eked out a 0.25% gain while the Nasdaq held steady. The dynamic underscores how buybacks continue to rewrite traditional market mechanics.