How ‘Black Friday’ affects the Stock Market?

By Advisorymandi
4-August-2018 8:33:18 AM

Black Friday is one of the most crucial shopping events within the United States, especially for the retail store owners.  It has a big influence on both retailers and consumers across the nation. It is the first day following Thanksgiving – A busiest retail shopping day of the year. It is the informal name for the day given to the fourth Thursday of November which has been regarded as the beginning of the country’s Christmas shopping season since 1952. It is the day people eagerly waiting for and do savings just to spend on this biggest shopping occasion. And not just the consumers but also retail investors prepare for this day, they advertise with flyers, doorbuster deals, shopping coupons, and much more. So, not only consumers prepare by doing savings in earlier months but also departmental stores, retailers, and Black Friday online platforms such as Black Friday Coupon Store, Amazon, Walmart, and Target among others stocking up on inventory in the earlier months and update the latest Black Friday deals and sales ads on their respective platforms.


In fact, Black Friday plays a major role in the overall health of the economy. It is because when Black Friday is close, people tend to save their money just to do extra purchases on this day. It is the beauty of this day that encourages people to do more shopping that might not otherwise occur. Similarly, the Black Friday influence the stock market and boost the prices of stocks.


Black Friday & Stock Market


Black Friday is no different than any other indicator which can predict the direction of the market. However, it is only for short-term. So, basically, we can say that Black Friday has a temporary effect on the stock market.


To best illustrate this, let’s take an example of the DJIA of the year 2011 when it increased almost 300 points on the following Monday after retailers reported stronger-than-expected sales. And not only that we look at the statistics from the previous year Black Friday then you will be shocked to know that American shoppers spend around $5billion in just 24 hours. If we compare this stat with 2016’s, there was an increase in dollars spent online by 16.9 percent.


This short-term effect boosts the stock prices for a temporary period which convinced many investors to look at Black Friday sales numbers as a way to gauge the overall health of the retail industry.


When people do extra purchases, it benefits the retailers which further increase in the retail sales. Retail Sales always has been a crucial economic indicator to gauge the overall health of a nation’s economy and calculating GDP and seeing the influence of Black Friday on retail sales, clearly indicates that Black Friday is no different from any economic indicator and certainly helps in predicting the direction of the market even for short-term. On top of that, the stock market does affect by having extra days off for Thanksgiving and Christmas. The market tends to see increased trading activity and higher returns the day before the holiday. This phenomenon is known as the holiday effect.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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