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Discount Retailers

Black Friday sales may typically only last a weekend, but sales figures are often treated as important indicators by investors. Encouraging results may suggest high consumer confidence, which could be seen as a positive signal for the retailer and the economy, serving to raise share prices. This underlines the importance of traders considering a range of fundamental reasons that can contribute to moves during the holiday season. Some argue in favor of the Keynesian effect of spending driving economic activity, which puts more money into circulation and potentially buoys the economy. At a time when the US economy has shown signs of recession, consumer spending might be welcomed.

Monday after Black Friday has been a bad day for stocks averaging a loss of 0.23% with 41% of the returns positive. Wednesday and especially Friday have been the days that helped next week be historically bullish. Friday of next week has averaged a gain of 0.58% with 78% of the returns positive. The financial shock also caused investors to rethink how aggressive the Federal Reserve will continue to be with rate hikes, helping to send short-term yields lower. The central bank is meeting next week and was largely expected to raise rates for a ninth time since March of last year — but that was before Silicon Valley Bank’s collapse happened last week. J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P.

Investors swarmed into U.S government bonds Monday after the collapse of Silicon Valley Bank and subsequent government backstop of the banking system. Whether you choose to work with an advisor and develop a financial strategy or invest online, J.P. Morgan offers insights, expertise and tools to help you reach your goals. JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. Information presented on these webpages is not intended to provide, and should not be relied on for tax, legal and accounting advice.

How Much of Your Portfolio Should You Commit to Black Friday Stocks?

Black Friday takes place the day after Thanksgiving, is full of big discounts, and is considered the beginning of the holiday shopping season. Many analysts and investors scoff at the notion that Black Friday has any real predictability for either the fourth quarter or markets as a whole. Instead, they suggest that it only causes very short-term gains or losses.

While investors continue to fret about macroeconomic factors like inflation and monetary policy, they had largely gotten past anxiety over Covid. Large swaths of the travel and leisure business have staged a return this year, while pandemic darlings like Zoom and Peloton have fallen out of favor. Even after today’s selloff, the Dow has risen 12% in 2021 to date, while the tech-heavy Nasdaq is up 17%. Based on the graph below, which includes data from 1928 through 2018, it turns out September is historically the worst month in the stock market, losing an average of 1%.

Apart from any potential retail plays over the Black Friday week, there may be something of a short-term strategy at this time of the year. Historically, stocks stage a year-end rally that carries into the new year. Adding money to your portfolio in November and early December might let you capture some gains in the news few months. With Black Friday numbers revealing so much about the economy, I was curious if the stock market reaction could be an indicator itself. The table below is interesting, suggesting next week’s price action is a trustworthy indicator. Since 1990, when the week after Black Friday has been positive, the S&P 500 gained an average of 3% over the next three months with 76% of the returns positive.

• In other words, it should be a telling week for the stock market.
• Of course, every other investor will be aware of the same situation, so it’s unlikely you’ll get the jump on selling.
• However, the overall stock market and broader investor sentiment are not always impacted by the results of Black Friday, with market participants focused on a variety of economic and political developments.

One sector you may not have given much thought to is restaurants. With holiday shoppers out all day on Black Friday and into the weekend, people need a place to eat or to take a break from shopping. There’s a lot of hype and speculation, and for the long-term investor, its really a lot of fuss over nothing.

What time does the stock market close on black Friday?

The S&P and Nasdaq each slipped more than 2%, with the performance of the three major indices combining for the worst Black Friday for the stock market since 1950. Compounding the problem is that such sentiment can carry into the new year. After all, fourth-quarter performance is a strong indicator of what will stock trading 101 with robinhood update play out in the coming year, and that may be more significant in the retail sector than any other. When investing in a major retailer, consider the ones that typically do well during the holiday season. This can include major retailers like toy stores and department stores offering a wide selection of gifts.

Also, the percentage of returns that have been positive is higher than typical weeks (68% vs. 57%). I thought you might see a higher standard deviation during the week because of reactions to the retail shopping data but that has not been the case. Cyber Monday is the Monday after the holiday weekend; sales during the five-day period of Thanksgiving through Cyber Monday are seen as reflective of consumer sentiment.

However, as mentioned above, it’s important to be aware of a whole range of other factors that can impact the market and overshadow any moves caused by consumer sentiment. This confidence can be reflected in the stock prices of the retailers that post strong sales. Conversely, many take it as a sign of trouble if retailers are unable to meet expectations on Black Friday. Concern over the economy is magnified if consumers are perceived to be reining in their spending. While Black Friday history begins with the catastrophic 1869 stock market crash, the modern iteration of Black Friday has seen retail stocks making strong returns around the Black Friday period. This can be observed in the S&P 500 where, in a ten-year timeframe, Bloomberg data shows a 5% return for retail stocks compared to an average 3% over a period of one week before Black Friday to one week after.

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The influence of Black Friday on stock markets and individual stocks is also less than straightforward. Perhaps predictably, a range of retail stocks can be expected to rise if sales expectations are met. Conversely, unexpectedly weak sales can suggest poor consumer confidence and a fragile underlying economy, giving traders reason to go short. Thanksgiving week means Black Friday, the unofficial start of the holiday shopping season. After a few years of being open on Thanksgiving, many retailers will be closed this year, like last year, due to Covid-19, labor shortages, etc.

Economists, based on the Keynesian assumption that spending drives economic activity, view lower Black Friday numbers as an indication of slowed growth. Because Black Friday makes up almost 20% of total retail sales, investors sometimes use Black Friday figures as a predictor of Q4 results, which are often released the following January. Poor Black https://day-trading.info/ Friday sales figures can dampen hopes for a profitable quarter, decreasing demand for a company’s stock and pushing the share price down. In conjunction with Cyber Monday, the Monday after Thanksgiving that pushes online sales, the shopping period is seen by some analysts and market commentators as providing a measure of economic prosperity.

Testing times

The table below shows how the S&P 500 performed over the next three months depending on how the market did the week after Black Friday. This has been an excellent indicator at predicting the next three months. When the S&P 500 gained 1% or more the week after Black Friday, the next three months averaged a return of 3.9% with over 80% of the returns positive. When next week has been down by a percent or more, the index lost an average of 4.6% with just 33% of the returns positive. Consumers are on track to spend big this holiday season and Wall Street analysts have their eyes set on certain retail stocks they believe will outperform.

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JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. When all is said and done, Black Friday is more of a shopping event for consumers than an investment indicator for investors. Rather than focusing on any bounce from certain retail stocks that might benefit from Black Friday, it may be more a matter of positioning for a general market upturn. If there is a play during this holiday week, that one might be the most predictable. If the stocks you’re currently holding in your portfolio are fundamentally sound, there’s no need to make a change based on the upcoming holiday season. And of course, with so many people shopping online sales these days, online retailers seem like a sure bet no matter what’s happening with the big retail chains.