American markets face a shortened week for Thanksgiving on Thursday and the half-day session on Friday – but the big attraction will be the size of sales (and any growth) in the early start to the Christmas sales season starting Black Friday (but really sometime on Thanksgiving on Thursday).
Then online retailers like Amazon and others start their sales assault Sunday/Monday (its called Cyber Monday, but like Black Friday, seems to be starting a bit earlier each year). Bricks and mortar giants like Walmart and Target will have two bites at the sales cherries through Black Friday and then Cyber Monday.
According to the Financial Times, retail sales in November and December are expected to rise between 4.3% to 4.8% year-on-year to between $US717.5 billion to $US721 billion, according to the US National Retail Federation. That is slower than the 5.3% increase in 2017 — but higher than the average growth of 3.9% over the past five years. Online, Cyber Monday is expected to see $US23.4 billion in sales.
For the first time, Walmart and Target have forced Amazon onto the defensive with their offer for free two day delivery anywhere in the US. Amazon has that offer for its 100 million or so Prime members but has been forced to extend it to all purchases this Cyber Monday/Christmas season.
Retailing stocks will be closely watched this week and next because of this annual event. Coming on top of Friday’s rebound, there could be a bit more cheer around for the shortened week’s trading.
US and Eurozone shares fell 1.6% over the week, Japanese shares lost 2.6% and Australian shares fell 3.2% and have almost fallen back to their October lows with financial shares under renewed pressure.
Chinese shares were an exception and managed a 2.9% gain but that is after the 31% decline from this year’s high.
The Dow climbed 123.95 points, or 0.5%, to 25,413.22 and the S&P 500 index rose 6.07 points, or 0.2%, to 2,736.27. The Nasdaq eased11.16 points, or 0.2%, to 7,247.87.
For the week, the Dow fell 2.2%, the S&P 500 dropped 1.6%, while the Nasdaq declined 2.2%.
Utilities gained as Pacific Gas & Electric (PG&E), the big California utility, saw its shares surge more than 37% higher after the head of the state’s utilities regulator eased investors’ concerns about potential wildfire costs from the terrible damage in the north of the state that has already seen more than 60 deaths and hundreds of people missing.
PG&E already is facing steep costs from big wildfires in late 2017 in California, but the two big fires (the other is near Los Angeles) will produce much bigger costs in terms of casualties and property damage.
The regulator has made it clear he doesn’t see bankruptcy as an option in the case of PG&E if the costs of the fires become too much.
Elsewhere tech worries continued – this time it was chipmaker stock under pressure after Nvidia issued a weaker revenue forecast than expected, due in part to waning demand from cryptocurrency mining.
Nvidia plunged more than 18% on Friday and more than 20% for the week, while Advanced Micro Devices slipped 3.8%.
Apple shares lost 5.3% for the week and 1.1% on Friday and Amazon shares eased nearly 7% and 1.6% on the day.
The yield on the 10-year Treasury bond fell 5 basis points to 3.0683 percent.
The move came as the Federal Reserve’s vice-chairman, Richard Clarida, suggested the central bank is getting closer to a neutral rate and that there could be fewer increases next year than the market was pricing in. The yield on the bond peaked at more than 3.26 six weeks ago.
