We take a look at a half-day trading day from the pre-market where futures are flat: the Dow is in the green right now, the Nasdaq is in the red right now and the S&P 500 is showing a zero balance. A long Thanksgiving Day weekend is already impacting trading volume and with no economic report or Q3 earnings expected before or after the market close today, our sails are still set this morning.
Usually – or at least for the last few decades – today brings us the retail phenomenon dubbed “Black Friday,” where early Christmas shoppers jumped at the hottest gift items and deepest discounts. Back to the origins of Macy’s ((M – Free Report) Day Parade Almost 100 years ago, the Friday after Thanksgiving was considered the first day of the holiday shopping season.
Yet, as anyone who has visited a listed drugstore or discounter since October can attest, the holiday shopping season seems to start earlier and earlier each year. And with e-commerce purchases — and sales — accounting for a larger and larger portion of total retail purchases each year, the days of your aunt lacing up her running shoes after enjoying a turkey meal with the family are all but gone .
Expectations for Black Friday this year are for around $13 billion worth of goods to be moved on this momentous shopping day, down -7.4% from 2021 (according to BlackFriday.com). Interviews with shoppers in stores are already showing fewer discounts than in the recent past at select stores; This may mean those Black Friday rebates will come later in the shopping cycle when stock levels could be a problem for stores so soon after post-Covid stock levels are finally back on track.
On the other hand, supply chain issues and higher fuel costs from a year ago could mean discounted holiday goods are eating away at profit margins more than in previous years. So it’s a delicate balance between supply and demand that always adjusts in an economy that has its share of challenges like inflation and relative job insecurity. For one, consumers are reportedly already racking up credit card debt shortly after posting record-high savings rates during the pandemic era.
Numbers reported after this weekend – and we can throw Cyber Monday into the equation as well – will tell the story, but expectations are rather positive at this point: the SPDR S&P Retail ETF ((XRT – Free Report), while down slightly this morning, is up +5.6% over the past five trading days. That paints a pretty robust picture for the holiday shopping season of 2022. And the stock market sure could use a rally heading into the last month of the year.