Shoppers stormed both digital and physical storefronts with wallets wide open over the Thanksgiving holiday weekend, pushing U.S. online sales to an eye-popping $10.8 billion.

This is nearly a 10% increase over last year’s figures.

Retailers from Walmart to Amazon reaped the rewards, and the stock market took notice, with the Dow Jones Industrial Average closing at an all-time high on Black Friday, with the S&P and QQQ following suite on Cyber Monday with record closes.

There’s no doubt, the strong U.S. consumer is giving this market a boost.

At Market Traders Institute (MTI), we’re here to help you navigate the signals and spot the trades that matter most. Let’s break down the key insights from this year’s Black Friday spending spree and how you can position yourself to capitalize on them.

The Consumer Is Resilient — and That’s Bullish for the Market

Despite inflationary pressures and concerns over economic slowdowns, U.S. consumers showed remarkable resilience this Black Friday. From in-store shopping increasing by 0.7% year-over-year to online retail sales hitting record highs, spending data paints a picture of confidence.

This robust consumer activity is a cornerstone of the U.S. economy, making it a vital signal for traders. 

Why? 

Because a strong consumer often translates to strength in retail stocks, broader indices, and even the U.S. dollar. When consumers spend, the economy grows—and so do opportunities in the market.

• Walmart (WMT): With impressive foot traffic and robust sales across departments, Walmart emerged as a leader this season. 
• Amazon (AMZN): Dominating the e-commerce space, Amazon’s stock rose, buoyed by soaring online orders.
• Dick’s Sporting Goods (DKS): A dark horse among specialty retailers, Dick’s capitalized on well-managed inventory and high demand, securing its place as a top performer.

What’s the takeaway here? 

Theres a bigger picture to grasp: Sector Performance.

The SPDR S&P Retail ETF (XRT), a barometer for retail sector health, and the VanEck Retail ETF (RTH), representing retail giants, are two key ETFs to track the consumer trends.

SPDR S&P Retail ETF (XRT):

• Composition: XRT employs an equal-weighted strategy, providing exposure across a broad spectrum of retail companies, including specialty retailers, department stores, and e-commerce platforms. This approach results in a diversified portfolio where no single stock dominates.
• Top Holdings: As of the latest data, the top holdings include Carvana Co. (2.40%), EVgo, Inc. (1.81%), and Victoria’s Secret & Co. (1.77%).
• Year-to-Date (YTD) Performance: XRT has achieved a YTD return of approximately 15.62%, reflecting the overall health of the retail sector. 

VanEck Retail ETF (RTH):

• Composition: RTH is more concentrated, focusing on the largest U.S.-listed retail companies, resulting in a portfolio where top holdings have significant weightings.
• Top Holdings: Major constituents include Amazon.com Inc. (20.14%), Home Depot Inc. (8.12%), and Walmart Inc. (8.13%). 
• YTD Performance: RTH has delivered a YTD return of approximately 22.56%, outperforming XRT, likely due to its concentration in high-performing retail giants. 

Compared to the S&P 500, the YTD performances of XRP is underperforming the S&P’s 20.38%, while RTH is outperforming at 22.56%. 

And to understand this, look no further than those top holdings. RTH is heavily weighted into a few strong stocks, WMT and AMZN while XRP is more evenly spread out amongst more holdings.

As long as the consumer is strong, this sector, and these sector ETFs, should remain at the top of your buy list.

Your Next Move

The markets are constantly sending signals — it’s up to you to act on them. 

Black Friday 2024 has proven that the consumer remains a powerful force, and that means opportunities abound for those prepared to trade smart. 

At Market Traders Institute, we’re here to guide you every step of the way. With expert insights, cutting-edge tools, and a community of passionate traders, you’ll be equipped to turn today’s market moves into tomorrow’s profits.

Ready to take your trading to the next level? Join us today and discover the strategies that can transform your financial future.

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