Wall Street hopes for Black Friday boost
November 28, 2010
NEW YORK — Black Friday, the first major shopping day of the holiday retail period, has come and gone.
Now stock investors searching for clues about consumer spending will look closely at how the big stores fared.
The holiday period accounts for about 35 percent of an average retailer’s revenue, and 10 percent of holiday buying takes place on Black Friday alone, said Chip Brian, founder or SmarTrend. Last year, the major indexes gained an average of 5 percent from Nov. 1 to Dec. 1.
Of course, domestic consumer spending isn’t the only factor driving the markets.
Fears that the debt problems of the hardest hit European economies will spread throughout the eurozone have taken the spotlight in recent weeks. Greece and Ireland have accepted bailouts, and investors are worried that Portugal and Spain may be next.
In fact, concern about Europe overshadowed the flurry of Black Friday shoppers hitting the stores: Stocks ended sharply lower after a rollercoaster week.
But barring any new developments overseas, investors are likely to turn their attention back to the United States this week, which will bring a full plate of new economic data.
And they will “take cues” from Black Friday, said Matt Kaufler, equity market strategist and portfolio manager at Federated Clover Investment Advisors.
“If there’s a strong showing from the retail community getting out of the gates for the holiday shopping season, that will only reinforce the data we’ve seen that has shown consumer spending ticking up, unemployment ticking down and consumer confidence remaining at a higher level,” Kaufler said.
Along with retail performance, investors will be looking closely for improvement in jobs. Several key readings are due out in the coming week, culminating in the government’s widely-anticipated monthly employment report on Friday.
Tuesday: The November reading of Chicago PMI, a regional manufacturing index, is due shortly after the start of trading. Economists expect that it fell to 59.8 from 60.6 in October. Any index reading over 50 indicates expansion.
The Case-Shiller index of September home prices in 20 major metropolitan areas is also due after the opening bell. Analysts forecast a 1 percent rise after the previous month’s 1.7 percent gain.
At 10 a.m. ET, the Conference Board will release a reading on consumer confidence for November. The index is expected to have ticked up to 52 from 50.2 in October.
Wednesday: The Institute for Supply Management’s manufacturing index for November will be released in the morning and is expected to have edged down to 56.4 from 56.9 in October. Any number above 50 indicates growth in the sector.
Construction spending is forecast to have ticked down 0.5 percent in October, following a rise of 0.5 percent in September.
A report from payroll services firm ADP is expected to show that employers in the private sector added 58,000 workers in November after boosting payrolls by 43,000 in the previous month.
Separately, outplacement firm Challenger, Gray & Christmas issues its report on planned job cuts in November.
In the afternoon, the Federal Reserve will release its Beige Book report on economic conditions across the central bank’s 12 districts.
Meanwhile, the U.S. government’s weekly crude oil inventories report and readings on mortgage applications, unit labor costs and third-quarter business productivity are also on tap. Auto and truck sales are due throughout the day.
Thursday: The government’s weekly jobless claims report comes out before the start of trading, with 423,000 Americans expected to file new claims for unemployment, after 407,000 were filed in the previous week.
After the bell, the National Association of Realtors releases its pending home sales index, a measure of sales contracts for existing homes. The index is expected to be unchanged in October after slipping 1.8 percent in September.
Friday: The week’s most closely-watched reading on employment is due Friday. Employers are expected to have added 130,000 jobs in November after adding 151,000 jobs in October. The unemployment rate is expected to remain unchanged at 9.6 percent.
Factory orders are due from the Commerce Department after the start of trading. Orders are forecast to have declined 1.2 percent in October after increasing 2.1 percent in September.
The ISM services sector index for November is expected to have edged up slightly to 54.5 from 54.3 in October.