Black Friday is the name given to the day comes after Thanksgiving – is one of the biggest and most important days in the U.S. history. It is one event which recognized as the biggest day in the United States, in terms of retail and spending events. Black Friday is all about digital sales where every holiday season, prognosticators make predictions about the levels of sales on Black Friday, and investor’s confidence may be affected by whether or not those expectations are met.
In short, we can say that Black Friday has short-term benefits for the economy of a country. It is because the holidays and festivals encourage people to do extra purchases that might not otherwise occur. Similarly, the stock market is affected by the Black Friday and other holidays.
If we look at the stats of previous year records and stats of Black Friday then American shoppers spend around $5 billion in 24 hours. In a comparison of the year 2016, there was an increase in dollars spent online by 16.9 percent.
When consumers spend lots of money on Black Friday – and retailers show strong numbers – then investors get their first hint of the profitable shopping season. This increase in the confidence of investors can clearly see in the stock market. In this manner, we can say that Black Friday is one leading indicator for the markets.
But, that’s a vice-versa situation because if the investors don’t meet the expectations on Black Friday, it could be a sign of trouble.
Understanding Black Friday & Stock Market
Black Friday is important because this is the shopping day on which many retailers have traditionally made enough sales. That’s why, many retailers, the Black Friday is crucial for their business’s annual performance.
It is also the reason why many investors use Black Friday sales data to gauge the overall health of the retail industry.
According to many analysts and financial advisers, the Black Friday only causes short-term gain or losses in the stock market. Even according to a 2008 Market Watch analysis performed by Mark Hulbert who looked at a 114-year sample on stock market performance concluded that there was no correlation between a Black Friday bump and Q4 performance. And Black Friday can have short-term trading implications but long-term is still uncertain.