Two events will shape the markets this week: light trading because Thursday is Thanksgiving and the shopping madness that typically follows on Black Friday.
In light of how the economic downturn has pummeled consumer spending, though, investment advisers are issuing a word of advice: Focus on the turkey, and turn off the TV.
"I'm in touch with every one of my clients this week, telling them not to even turn on their computers next week," Vincent Barbera, director of financial planning at TGS Financial Advisors, says. "Don't turn on your televisions. Just relax and wait for a potential December rally. Buy some Christmas presents at big discounts."
It wouldn't be surprising if some investors do opt to stick their heads in the sand next week. The market has been bombarded with dour news about consumer sentiment and weak data for retail and auto sales to back up shoppers' emotional claims. More data will be released on consumer sentiment next week, as well as personal income and spending, but a Conference Board survey released on Friday was a bleak curtain raiser for the holiday season. U.S. households expect to spend an average of $418 on Christmas gifts this year, 11% less than the holiday shopping season of 2007, according to the group.
The pullback has been something of a windfall for cost-cutting wholesalers, as consumers flock to thriftier outlets, like
Wal-Mart (WMT Quote),
Costco (COST Quote) and
BJ's (BJ Quote) to stock up on essentials at discounted prices. But other merchants have reason to be concerned, whether a department store like
Macy's (M Quote) or
J.C. Penney (JCP Quote), a mall-centric store like
American Eagle (AEO Quote) or
Pacific Sunwear (PSUN Quote), or a high-end retailer like
Saks (SKS Quote) or
Nordstrom (JWN Quote).
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Lauren Tara LaCapra
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