NEW YORK, Nov 25 (Reuters) – U.S. retail stocks held steady on Friday as investors watched holiday spending to gauge consumer confidence at a time of rising inflation and interest rates weigh heavily on Main Street.
Consumer discretionary stocks, as measured by the S&P 500 consumer discretionary sector, which benefits from retail, restaurant and vacation spending, edged up less than 0.1%.
Stocks were reduced as crowds were thin on what has historically been the busiest shopping day of the year.
“If Black Friday shopping takes a hit this year, it doesn’t bode well for the rest of the holiday season which is so important to retailers,” said Craig Erlam, senior market analyst at Oanda.
Consumer discretionary stocks are down nearly 32% year-to-date, more than double the 15.5% decline in the S&P 500 (.SPX) index as consumers have been hit by the soaring inflation and the fastest rising interest rates since the 1970s.
“These stocks are a clue as to how fast the economy is slowing and whether slowing inflation is boosting confidence on Main Street,” said Jim Paulsen, chief investment strategist at Leuthold Group.
Ralph Lauren Corp (RL.N), VF Corp (VFC.N) and Autozone Inc (AZO.N) led the sector’s weak gain on Friday, each adding more than 1.7% against a loss of less than 0.1 % in the benchmark S&P 500 (.SPX) index.
Consumers spent a record $5.29 billion online on Thanksgiving Day, Adobe Analytics data shows, up 2.9% from a year ago, thanks to deep discounts in categories such as toys and electronics.
The biggest Black Friday deals, named after the Thanksgiving holiday, were on toys, peaking at 34% off the listed price, electronics and computers.
Consumer prices in the United States rose at a slower pace than economists had expected in October, pushing the annual increase below 8% for the first time in eight months and helping to trigger a broad US stock market rally on hopes that inflation has finally peaked after hovering around 40-year highs.
Overall, the National Retail Federation, a trade group, expects holiday sales, including e-commerce, to grow between 6% and 8% to between $942.6 billion and $960.4 billion. in November and December. That would be less than last year’s 13.5% jump and 9.3% gain in 2020.
Retailers started offering discounts unusually early this year.
Target Corp (TGT.N), Kohls Corp (KSS.N) and Amazon.com Inc (AMZN.O) launched the first Black Friday deals that slashed toys and some other goods by up to 50%.
Those companies did not respond to requests for comment.
Even with steep discounts, consumers will have to spend more on popular products like a PJ Masks toy car or Mattel Inc’s (MAT.O) Mega Hauler semi-truck as prices have risen faster than promotions, data shows. provided by DataWeave.
Mattel did not respond to a request for comment.
Buyers are being courted as the closely watched University of Michigan Consumer Sentiment Survey was revised higher on Wednesday to 56.8 from 54.7, beating consensus expectation of 55.0 but still below 59.9 in October. Expectations to buy durable manufactured goods fell 21% due to high interest rates and high prices, according to the survey.
“Sentiment data has slid sideways as consumers try to reconcile strong economic and labor market conditions with expectations of a recession and hurtful inflation,” said Thomas Simons, economist at Jefferies LLC.
Reporting by David Randall; Editing by Nick Zieminski, Anna Driver and Richard Chang
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