Black Friday, one of the most anticipated and significant days in retail, falls on the Friday following Thanksgiving in the United States. This day is considered an early indicator of the success of the Christmas shopping season and can serve as a trigger for the so-called "Santa Claus rally" – a period of stock market growth typically observed from late December to early January. Let’s explore how Black Friday might influence the stock markets this year.

Fundamental Analysis

According to data from the Federal Reserve Bank of St. Louis, consumer spending accounts for approximately 70% of the U.S. Gross Domestic Product (GDP). Many analysts view stimulating consumer spending as key to sustaining economic activity. Thus, Black Friday sales figures are often seen as a vital indicator of the nation’s economic health.

In 2024, Black Friday takes on added importance amid the Federal Reserve's recent cycle of interest rate cuts. Consumer spending levels during the sales period will reflect the current state of the economy, which could influence the Fed's future monetary policy direction.

Impact on the US Stock Market

From 2001 to 2023, trends in the S&P 500 index around Black Friday have been variable, though generally positive. For example, the S&P 500 gained more than 1% in 2001, 2007, and 2012, while in 2009, it fell by 1.7%. This variability highlights the difficulty of finding a consistent annual pattern.

However, retail stocks often display discernible trends during this period. As noted by Yahoo Finance, some companies’ shares have shown positive momentum in the week before and after Black Friday.

Historically:

• Between 2013 and 2023, the retail sector outperformed the S&P 500 in late November.
• From 2007 to 2017, certain retail stocks within the S&P 500 delivered returns of up to 5%, compared to the index’s average return of 3% during the same period.

Technical Analysis

It’s not always straightforward. A comparison of the S&P 500 (US SPX 500 mini on FXOpen) and Walmart (WMT), one of the largest retail corporations, illustrates differing dynamics.

The chart below highlights fluctuations:

• Blue line: S&P 500 (US SPX 500 mini on FXOpen)
• Orange line: Walmart stock (WMT)

Vertical lines mark Black Friday periods in 2022 and 2023.

Key observations:

• In 2022, Black Friday coincided with a market decline. Historically, the stock market was near critical highs, leading to heightened selling pressure.
• In 2023, Black Friday acted as a driver for both Walmart shares and the S&P 500.

Black Friday 2023

According to the National Retail Federation (NRF), approximately 200 million people shopped during Black Friday 2023, spending an average of $321.41 per person – a historic record.

Major retailers such as Amazon, Walmart, and Target benefited primarily through their online platforms and effective marketing strategies, as more consumers opted for the convenience of e-commerce.

What Should Traders Expect from Black Friday 2024?

NRF forecasts suggest that in 2024:

• About 34% of Americans will shop on Black Friday.
• Spending is expected to reach another record high, with a 3% increase compared to 2023.

Furthermore, 71% of consumers surveyed by Deloitte indicated they plan to shop online, underscoring the ongoing shift toward e-commerce.

However, analysing market behaviour around Black Friday 2024 is challenging. Each year is shaped by unique political and economic factors. While rising consumer spending could boost company earnings and lead to an upward trend in the S&P 500, individual factors will play a significant role.

To prepare to Black Friday traders usually:

• Monitor retail sector stocks
• Analyse consumer spending trends
• Leverage macroeconomic indicators
• Determine their risk aversion
• Stay updated.

Once you prepare your trading strategy, open an FXOpen account and trade CFDs on US stocks and indices with tight spreads. Enjoy low commissions from $1 per order for stocks and zero commission for indices. Good luck!

FAQ

Does Black Friday Have a Positive Impact on the Stock Market?

Black Friday's impact on the U.S. stock market is mixed. While it offers valuable fundamental data to analyse broader economic trends and consumer sentiment, its overall effect on the market is hard to track. However, Black Friday often has a more noticeable impact on retail stocks, as strong sales volumes directly influence their financial performance.

Are Stock Markets Open on Black Friday?

In 2024, Black Friday falls on 29 November, and U.S. stock markets will close earlier than usual. You can find more detailed information here.

Where Did the Term "Black Friday" Originate?

The term "Black Friday" has two main origins. The first is linked to a financial crisis in the United States in 1869 when a collapse in gold prices caused widespread market turmoil. The second explanation comes from 1960s Philadelphia, where local police coined the term to describe the chaos caused by large crowds of shoppers and tourists during the annual Army-Navy football game weekend.

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