The title "Black Friday" is given to the day after Thanksgiving in the U.S., ꦐa retail and spending event. Sales on Black Friday can shed light on investor confidence and consumer spending trends.

When consumer spending on Black Friday is high, investors have their first indication of a profitable shopping season. Stock pric🤪es for retailers may reflect this trend. Conversely, if retailers do not meet expectations on Black Friday, consumers may be reining in their spending, and the stock market may react accordingly. 

Thanksgiving Shopping

Retailers rely on strong Black Friday sales to earn a profit for the year, commonly offering major sales and 澳洲幸运5官方开奖结果体彩网:doorbuster deals on overstock inventory, seasonal items, big-ticket items, and hol🅷iday decorations and gifts.

In 2023, a record 200.4 million people shopped in stores or online from Thanksgiving Day through Cyber Monday, according to the National Retail Federation, spending an average of $321.41 each over the five days for a total in excess of $966 billion. Top Thanksgiving purchases included food, decorations, clothing, and accessories, as well as gifts and black Friday deals-including toys, cards, books, video games, candy, and electronics.

Holiday Retail Trends

For 2024, holiday spending is expected to reach another record level during the Holiday shopping period, growing at 3% over 2023. Indeed, let's consider the "Holiday shopping period" as November and December (as the National Retail Federation does). We can see that total Holiday spending is expected to increase from $875 to $902 per individual.

A Deloitte holiday shopping survey indicates even higher amounts when accounting for additional spending on non-gift purchases and experiences such as vacationing or travel. According to their 2024 holiday retail survey, consumers are expected to spend an average of $1,778 this Holiday season (8% more than in 2023), well surpassing 2019 pre-pandemic figures.

Another continuing trend is the shift to online and e-tail channels for holiday purchases. Indeed, 71% of consumers surveyed by Deloitte report that they will be going online this year. Still, brick-and-mortar retailers are not forgotten. More than half of holiday shoppers plan to go to 澳洲幸运5官方开奖结果体彩网:big-box retailers and just about one-third to department stores.

Thanksgiving and Stock Market Performance

Thanksgiving has proven an important day for those in the food industry, and Black Friday is a strong day for retailers. The U.S. stock markets, however, are closed on Thanksgiving and have shortened hours (until 1:00 pm EST) on Black Friday.

Investors look at Black Friday sales numbers to gauge the retail sector. Economists with 澳洲幸运5官方开奖结果体彩网:Keynesian assumptions that spending drives economic activity may view lower Black Friday numbers as indicating slowed growth. Markets tend to see increased trading activity and higher returns the day before a holiday or a long weekend, a phenomenon known as the holiday or wee𓄧kend effect.

From 2001 through 2023, the S&P 500's overall performance around the Thanksgiving holiday has been mixed, seeing positive returns just half the time. Over that time, the S&P had more than 1% gains on just three Black Fridays—in 2001, 2007, and 2012—but fell as much as 1.7% in 2009.

The U.S. sector that thrives from the week before Black Friday to the week after is retail. Over the past decade, the retail sector has generally outperformed the S&P 500 during that period. Investors may follow the trends in retail sector funds and stocks like SPDR S&P Retail ETF (XRT), Amazon (AMZN), or Walmart (WMT) as the shopping season begins. 

The Bottom Line

Consumer spending around the Black Friday periodಞ following Thanksgiving can be a boon to retailers and indicates consumer sentiment to economists and investors. Over the Black Friday through Cyber Monday period, retail stocks see a bump i💝n sales, and analysts gauge how big the increased spending is and what it means for the wider economic outlook.