How Holiday Shopping, Asian Turmoil and Janet Yellen Will Affect Stocks
Retail sales at home, investor fear overseas and the Delphic utterances of Federal Reserve Chair Janet Yellen will dominate Wall Street in the coming week. Let's start with a look at Black Friday, which can make or break a retail chain's entire year.
The preliminary numbers for Thursday and Friday are in, and e-commerce stole the show. That's great news for the leaders in online retail, which happen to be among the stocks Warren Buffet is now buying.
According to data released over the weekend, sales at U.S. bricks-and-mortar stores on Thanksgiving Day and Black Friday were down slightly from last year. However, online sales posted double-digit gains. Look for the stocks of e-commerce bellwethers to get a lift in coming days, including Amazon.com, eBay and PayPal, as well as traditional retail stores with expanding and effective e-commerce footprints, such as Target.
Research firm RetailNext reported that overall sales for both days fell 1.5%, and average spending per shopper dropped 1.4%. ShopperTrak showed sales at stores totaled about $12.1 billion on Thursday and Friday, compared with $12.29 billion in the same period last year. However, online Thanksgiving and Black Friday sales tracked by Adobe Digital Index came in at $4.47 billion, an increase of 18% from last year.
In addition to concerns about the strength of retail during the all-important holiday season, investors will be nervously watching events overseas.
On Friday, markets in Asia were dragged down by reports of criminal investigations into rules violations at several major brokerages in China. Exacerbating the selloff was a deep and unexpected year-over-year drop in October profits at major Chinese industrial firms.
The Shanghai Stock Exchange Composite Index ended the day 5.5% lower, while the Shenzhen Stock Exchange Composite Index slumped 6.1%. U.S. and European stock markets were largely unfazed by the bad news, although many retail stocks declined Friday, including Walmart Stores, which lost 0.6%.
If the Asian contagion spreads this week, the remedial actions of market-moving investors will hold clues for the rest of the year and well into 2016.
Further important clues will be gleaned from Federal Reserve Chair Janet Yellen's testimony Thursday on Capitol Hill, before the Joint Economic Committee.
Here are the major events of the week ahead:
On Tuesday, Dec. 1, ShopperTrak unveils final "Black Friday" sales (the firm predicts a 2.4% year-over-year increase for November and December sales).
Earnings reports: Scotiabank (Tuesday): Brown-Forman (Wednesday); Dollar General, Kroger, Medtronic and Barnes & Noble (Thursday).
Economic Calendar
Tuesday, Dec. 1:
Motor Vehicle Sales
PMI Manufacturing Index
ISM Manufacturing Index
Construction Spending
Wednesday, Dec. 2:
ADP Employment Report
Gallup U.S. Job Creation Index
EIA Petroleum Status Report
Thursday, Dec. 3
Chain Store Sales
Jobless Claims
EIA Natural Gas Report
Janet Yellen Speaks to Congress
Friday, Dec 4
Employment Situation
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John Persinos is editorial manager and investment analyst at Investing Daily. At the time of publication, the author held no positions in the stocks mentioned.