U.S. stocks have received support from a key source during 2023's shaky market environment: companies repurchasing their own shares.

Stock buybacks by companies in the S&P 500 are projected to top $1 trillion in 2023 for the first time in a calendar year, according to S&P Dow Jones Indices. Authorizations for repurchases are picking up pace: As of Feb. 17, they totaled more than $220 billion, a record for that point in the year, according to a Goldman Sachs analysis of S&P 500 and Russell 3000 companies.

Among the biggest share repurchase announcements have been Chevron Corp.'s $75 billion buyback program, the $40 billion plan of Facebook parent Meta Platforms Inc. and Goldman Sachs Group Inc.'s $30 billion authorization.

Although such programs are typically executed at the company's discretion and over several years, they are viewed as a vote of confidence by management. And the buyback spree has buoyed stocks while dueling views about the path of monetary policy play out in the market.

Major indexes edged higher at the start of the year in the midst of enthusiasm that moderating inflation could lead the Federal Reserve to slow its pace of interest-rate increases -- but not without skepticism from many professional money managers.

Hot economic data recently have forced some investors to reconsider their Fed policy expectations. The S&P 500 has trimmed its year-to-date gains to 3.4%, notching three consecutive weeks of declines.

"Buybacks continue to be robust and provide a buoy for individual stocks and the market broadly," said Ben Silverman, director of research at the investment-research firm VerityData.

When a company buys back its own stock, the increased demand typically raises share prices. Buybacks don't accrue additional taxes for taxable investors until they sell shares and realize capital gains, unlike with dividend payouts, which are taxed as income.

Corporate clients at Bank of America Corp. have repurchased about $13.5 billion of shares on a net basis this year, according to the lender's equity-flows data released Tuesday. That is tracking roughly in line with last year's record levels and compares with about $9 billion of net outflows from hedge funds, institutional investors and individual clients, the data show.

"I'll take a buyback all day long," said L. Joshua Wein, a portfolio manager at Hennessy Funds. "When you stack up the alternatives, the buyback is, in my mind, the most efficient use of capital."

The fewer shares outstanding on the market as a result of buybacks also have the effect of lifting a company's per-share earnings. As profit margins are squeezed, some investors expect firms to continue doing buybacks in a bid to maintain earnings-per-share growth.

With about 94% of companies in the S&P 500 having reported fourth-quarter earnings, about 68% have topped Wall Street's expectations, a weaker beat rate than usual, according to FactSet.

Companies can more easily adjust share buybacks to respond to bumps in the markets and economy, compared with dividends and capital expenditures, which are more set in stone once initiated, according to investors and analysts.

"The dividend yield is much more sacrosanct in investors' minds," said David Waddell, chief executive at Waddell & Associates. Mr. Waddell said he likes buybacks for their tax efficiency. His firm is optimistic about stocks this year and is weighting portfolios toward international stocks, value shares and small-caps, he said.

Based on fourth-quarter results from roughly 90% of the companies in the S&P 500, share repurchases from reporting corporations have fallen about 18% from the prior year to $189 billion, according to S&P Dow Jones Indices data as of Saturday. Capital expenditures have risen around 18% year over year to $220 billion among reported results. Dividend payouts in the fourth quarter increased about 9% to $146 billion.

Megacap technology companies were among those spending the most on buybacks in the last three months of 2022. Apple Inc. spent roughly $19.5 billion on stock repurchases, Meta Platforms bought back about $6.9 billion of its shares, and Microsoft Corp. repurchased about $5.5 billion of its stock.

To some investors and analysts, the slowdown in stock repurchases in the fourth quarter actually signals good news for fans of buybacks. There wasn't a clear pull-forward in buyback spending ahead of the 1% federal tax on buybacks that took effect Jan. 1, so the excise tax likely won't deter companies from repurchasing shares this year, they said.

"Companies were not concerned about the buyback tax," said Mr. Silverman of VerityData. "There was not frontloading" of stock repurchases.

Companies continue to draw ire over their share-repurchase programs. President Biden in his State of the Union address earlier this month criticized big oil companies that used record profits to buy back stock. He proposed a quadrupling of the current 1% federal tax on buybacks.

Although few market watchers believe a 4% buyback tax could make it through a divided Congress, some investors and analysts said they are continuing to monitor the political situation regarding buybacks.

"What would change things is political pressure," said Mark Hackett, chief of investment research at Nationwide. "The political pressure will be nonzero. But it's very difficult right now to predict."

Warren Buffett defended the practice of stock buybacks in his annual letter to investors on Saturday. Mr. Buffett said they can benefit shareholders if they are executed when a company's share price is trading below its value.

"When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue," he said.

Questions: How do share repurchases serve as a "buoy" for individual stocks? How can share buybacks contribute to earnings per share growth? Do investors view share buybacks differently from dividends? If so, why? How has the 1% buyback tax impacted share repurchases?