S&P 500 proves that American companies increase capital investment

Major US companies are ramping up their spending on capital projects to a quarterly record despite worries about a potential recession, according to experts from letizo.com.

The stock price chart SP 500 is booming

The specialists who analyzed data for about 90% of the index’s components, expect S&P 500 companies to top $200 billion in capital spending in the third quarter of 2022, an increase of about 20% year-over-year.

Spending is generally welcomed by investors and seen as a sign of confidence from executives trying to expand deals and spur growth. Especially this concerns the following categories:

• real estate;
• equipment;
• technology.

But investors are penalizing some companies from the 100 US stock index fund, such as Meta Platforms Inc., for spending large sums on ambitious projects with no clear advantage.

Recession plans

In light of the uncertain economic environment, some investors say they are looking for companies that can spend money on projects that pay off in the short term. They hope that these firms will have a good opportunity to increase market share and emerge from a potential recession in better shape than their peers.

At the same time, they say they are not prepared to wait to see if the big spending pays off as the US Federal Reserve continues to aggressively raise interest rates.

What about Meta?

Meta spent $9.5 billion on capital projects in the third quarter of 2022, the second-highest amount among companies that are moving the US tech 100 stock price. The tech giant projects capital expenditures of up to $39 billion in 2023.

Also, analysts call pressed executives to justify investments meant to expand the capabilities of artificial intelligence. CEO Mark Zuckerberg expressed confidence that his initiatives will reward shareholders who have shown patience. The next day, Meta shares fell 25%, to their lowest level since 2016.

Meta later narrowed its 2023 capital spending forecast and said it was laying off 13% of its workforce. Shares rose 24% last week.Will we see another change in the list of SP 500 companies and stock price?

According to S&P Dow Jones Indices senior analyst Howard Silverblatt, capital spending typically picks up in the fourth quarter. However, he believes that spending could slow down in the future, as is the case with share repurchases and dividend growth. If this fails to happen we can see some changes on the US tech charts.