Black Friday Phenomenon
From turkey eating to discount shopping, the day after Thanksgiving has proven to be one of the most profitable shopping rush of the entire year. Millions of Americans flock towards stores of all caliber looking for the best savings. These sales not only benefit the consumer but also can positively impact the U.S. retail stock sector if the stocks of the companies report strong sales.
Every year, the U.S stock market is open for half the day of the Friday after Thanksgiving in preparation for the day following. During the days before Thanksgiving and the long weekend afterward, the stock market tends to see a massive increase in trading activity and higher returns, as compared to the weeks before. This occurrence is known as the weekend effect. The cause of this event is continuously debated, but the factors of trading behavior for individual investors definitely contributes to this consistent pattern every year. A strong or weak Black Friday can have a massive impact on retail stocks; the number of sales and trade can be used to gauge a company's overall economic profit for each year.
Although many companies consider Black Friday profits essential to their revenue, many analysts and investors disagree with the concept that this shopping day has any real calculability for the market as a whole. They believe the market only influences short-term profits. Although there are differing opinions, the market does have significant impacts on retail stocks. An example of this was from 2007 to 2017 in the S&P retail stocks. S&P is the stock market index that measures the stock performance of the 500 largest companies. Certain stocks with S&P have continuously been increasing for many years. Most recently, the average stock number went from 3% to an increased 5% during Black Friday.
With COVID-19 the retail stocks saw significant average spending changes drastically. This pandemic has made more people shop online during Black Friday as compared to a crowded shopping center. Consumer spending is at an average of $9 billion electronically since the day after Thanksgiving. This means the spending this year increased21.6% from years prior. The addition of technology has made a positive impact by allowing companies to create their revenue, even during quarantine times, and keep people safe from the virus through shopping online. It is important to remember, as the consumer, that your purchases during Black Friday, and any time of year, can make an impact on companies and the stock market as a whole.
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Lauren, Thomas. “Black Friday 2020 Online Shopping Surges 22% to Record $9 Billion, Adobe
Says.” CNBC, CNBC, 28 Nov. 2020,www.cnbc.com/2020/11/28/black-friday-2020-