Will This Black Friday Kick Off Another Strong Holiday Shopping Season?

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What's Happening Today

It's Thanksgiving week, and with the holiday and markets closed on Thursday, there won't be too much to look out for by the way of economic data releases. But with the next Federal Reserve meeting less than a month away, investors have been paying close attention to comments and speeches from policymakers at the central bank as indicators of what's to come in the next rate hike.

They'll also be watching this week for the success of "Black Friday" which has traditionally kicked off the holiday shopping season. Typically, stores see big jumps in sales, but with inflation remaining high and some retailers reporting slowing sales, this weekend will be closely watched. If consumers don't decide to spend as much, it will raise concerns that the economy is struggling and might be headed for a recession. That's because roughly 70% of the U.S. economy is derived from consumer spending. If shoppers buy less, then the economy slows.

While retail sales have remained strong throughout the last couple of years (and even rose 1.3% in the month of October) several retailers have issued warnings during their quarterly earnings that they were seeing demand start to wane.

Predictions of a gloomy holiday shopping season could be a boon to those who can still afford to shop. Retailers are expected to offer record discounts this year to lure shoppers in.

Stocks are losing ground today as investors consider the latest in earnings reports and mull over the hawkish (meaning, in favor of rate hikes) tone many Fed officials struck last week.

- Kristin

Editors' Picks

Fed's Aggressive Rate Hikes Are a Game Changer (The Wall Street Journal)

Inflation Tests Corporate Plans to Steer Buyers to Premium Goods (Bloomberg)

Inflation Could Steal Christmas, but Shoppers are Finding Ways Around It (The Washington Post)

7 Holiday Shopping Mistakes You Need To Avoid (The Balance)

Home Sales Slump in October, But Outlook Could Improve (The Balance)

Markets Are Down. Should I Stop Investing? (The Balance)

Rule of Thumb: How Big Should Your Emergency Fund Be? (The Balance)

Term of the Day

Bonds

Bonds are essentially loans made to large organizations such as corporations, cities, and national governments. An individual bond is a piece of a massive loan. They are issued because the size of these entities requires them to borrow money from more than one source.

Investors buy bonds because they provide a safe, predictable income stream and can balance the risks posed by volatile but higher-yielding stocks and other, riskier portfolio assets. Investors also purchase bonds to earn interest on a regular basis until their original capital is returned.

Bonds are a type of fixed-income investment, which is a broad asset class. Other types of investments include cash, stocks, real estate, commodities, and derivatives.

Off the Charts

Home sales as a seasonally-adjusted annual rate have hit their lowest since the pandemic's early days, smothered by high mortgage rates, according to the National Association of Realtors. But if rates continue to recede, sales could recover from here, economists say.