AsianFin -- U.S. stocks surged in July, with the S&P 500 hitting 10 record highs during the month. Yet, as global investors flooded the U.S. market, corporate insiders moved in the opposite direction.
According to data from the Washington Service, insiders at only 151 S&P 500 companies bought shares of their own firms in July, the lowest number since at least 2018. While insider selling slowed compared to June, buying dropped even more sharply, pushing the buy-sell ratio to its lowest level in a year.
This cooling sentiment from executives came as the market’s momentum began to wane. The S&P 500 gained 2.2% in July, down from 5% in June and 6.2% in May. After that three-month rally, valuations have grown steep, with the index now trading at nearly 23 times forward earnings — well above its 10-year average of around 18.
Executives, often considered the most informed about their companies' prospects, appear cautious — potentially signaling concern about stretched valuations and the impact of U.S. President Donald Trump’s wide-reaching global tariffs on corporate earnings.
Executives are acting like institutional investors right now — conservative, valuation-conscious, and careful, Dave Mazza, CEO of Roundhill Investments, told Bloomberg.
Economic signals are also flashing warnings. Friday’s jobs report showed slowing employment growth and a slight uptick in the unemployment rate. Meanwhile, core inflation — the Fed’s preferred measure — accelerated in June, and consumer spending barely budged.
Mixed Signals
While insider trading should be interpreted carefully — often influenced by personal financial planning — the sharp contrast between Wall Street’s bullishness and executives’ hesitation is notable. The S&P 500 has now logged its first three-month winning streak in nearly a year and is up more than 25% from its April 8 low.
Corporate buybacks also slowed in July, remaining below seasonal norms for the fourth straight week through July 25, according to Bank of America strategists led by Jill Carey Hall. While a delayed earnings season may explain part of the dip, the data shows a steady decline in buybacks as a percentage of market cap since March — a potential sign that higher rates and valuations are weighing on corporate confidence.
Some analysts argue that buyback trends may be more telling than insider sales, since executives often sell shares for personal liquidity or diversification reasons. But taken together, the lack of insider buying and the pullback in repurchases point to a broader sense of caution.
The people with the most insight into corporate fundamentals are saying that much of the good news is already priced in, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.