NEW YORK (

TheStreet

) -- Stock buybacks by S&P 500 companies increased 128% in the third quarter, continuing the big buyback trend among the biggest U.S. companies in 2010.

Stock buybacks within the S&P 500 hit $79.5 billion in the third quarter, as compared to $34.9 billion in the third quarter last year.

The third-quarter 2010 stock buyback activity increased 2.5% over the second quarter 2010, S&P data shows. It's the fifth quarter in a row that S&P 500 companies have increased their share repurchase activity.

>>Top 10 S&P Stock Buybacks of 2010

Tech giants dominated the top spots in the third quarter buyback chart.

Microsoft

(MSFT) - Get Report

spent $4.4 billion on buybacks;

Hewlett-Packard

(HPQ) - Get Report

spent $4 billion; and serial stock repurchaser

IBM

(IBM) - Get Report

spent $3.7 billion.

Wal-Mart

(WMT) - Get Report

, with $3.9 billion and

Exxon Mobil

(XOM) - Get Report

with $3.3 billion, round out the top five among S&P 500 companies buying back shares during the third quarter.

"The 128% increase in share repurchases marks the full return of corporate participation in the equity markets," said Howard Silverblatt, Senior Index Analyst at S&P Indices in a new report on the stock buyback data. "While we do not expect a return to the 2005-2007 buyback bonanza, we do see this as a strong, positive sign for the overall health of the market."

The top 20 companies buying back shares continue to dominate activity in the S&P 500 universe, accounting for more than 51% of buybacks in the third quarter, or $41 billion.

The total number of companies joining the stock buyback parade has slowed. There were 261 companies purchasing their shares during the third quarter, compared to 257 in the second quarter and 251 in the first quarter of this year.

In terms of sector buyback data, information technology continues to be the dominant sector for stock buybacks, accounting for 28.6% of all buybacks in the third quarter (up from 27.3% in the second quarter). Tech companies are always at the top of the list among stock buybacks because the awarding of stock options to executives is a core means of providing compensation in the sector.

In the cases of Microsoft and Hewlett-Packard, stocks buybacks can also help to give lagging earnings a boost. Micorsoft's shares have been stuck in neutral, while Hewlett-Packard shares have declined 18% during a difficult 2010.

In fact, S&P is expecting fourth quarter earnings boosts for some S&P 500 companies, a oer share bump predicated on recent share count reduction activity that has occurred as part of management stock buybacks.

>>S&P 500 Buybacks: Top Q4 Earnings Boost Stocks

S&P's Silverblatt noted that over the past three quarters several companies have increased their buybacks in excess of their current use for employee options and M&A activity.

"For a few issues will see an earnings impact on their upcoming fourth quarter earnings per share in comparison to their fourth quarter EPS of last year due to share count reduction," the S&P official said in a release.

The biggest sector buyback decline quarter over quarter, was health care, dropping to 13.4% from 19% last quarter.

Energy increased from 4% of all buybacks to 6.4% in the third quarter.

-- Written by Eric Rosenbaum from New York.

RELATED STORIES:

>>S&P 500 Buybacks: Top Q4 Earnings Boost Stocks

>>Top 10 S&P Stock Buybacks of 2010

>>Top 10 Most Impactful Stock Buybacks of 2010

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