Investing.com -- U.S. companies are scaling back share repurchases as they are saving cash amid economic and policy uncertainties, Barclays said.

S&P 500 companies’ net spending on buybacks rose to $773 billion in 2024, which was higher than 2023, but the pace of repurchases moderated in the fourth quarter.

The number of companies engaging in buybacks declined across large, mid, and small-cap stocks, with only 71% of the S&P 500 reporting buybacks in the quarter, the lowest participation rate since 2020.

"Cash deployment in 4Q24 suggests that companies could be shifting toward conservation," Barclays analysts wrote, pointing to rising economic and policy uncertainties, including tariffs and immigration policy changes.

Companies are increasingly choosing to retire debt and limit spending on acquisitions, dividends, and buybacks.

The buyback activity has historically correlated with cheaper valuations and has been most impactful among mid-cap stocks in boosting returns.

Financials and healthcare companies led discussions on increasing buybacks in 4Q24 earnings transcripts, while formal repurchase authorizations declined, which signals a growing corporate caution.