US Retail ETFs Record Huge Gains on Black Friday.

In New York, retailers compete to draw customers on Black Friday.

On November 24, 2023, Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, U.S., people stroll to stores as retailers compete to draw customers and try to retain margins. Reuters/Alena Vincent Get the Rights to Licencing

Nov. 24, Reuters During Black Friday’s shortened trading hours, exchange-traded funds (ETFs) that follow US retailers had gains that outpaced general market indexes.

The Amplify Online Retail ETF climbed 0.4%, while the larger SPDR S&P Retail ETF gained roughly 0.7%, despite the S&P 500 index (.SPX) finishing mostly unchanged. In after-hours trading, both kept rising.

Analysts and retailers have issued gloomy predictions for this year’s holiday shopping season.

Even while the National Retail Federation, a group that advocates for big retailers, projects that the total value of US holidays would reach a record high of approximately $967 billion in 2023, the growth from 2022 of 3% to 4% would still be the lowest since 2019.

Retailers that have expressed concern about the outlook for the holidays and beyond include Gap (GPS.N), Walmart (WMT.N), and Best Buy (BBY.N).

Michael Ashley Schulman, chief investment officer of Running Point Capital, stated, “I believe that some forecasts have been distorted by the recently ended United Auto Workers and Hollywood SAG-AFTRA actor strikes, which caused a pullback in spending among various large pockets across the country.”

According to Lipper data, the $396.6 million SPDR S&P Retail ETF saw weekly withdrawals of $115.6 in the week that concluded on Wednesday. In a month, that was the biggest drop.

Nonetheless, the majority of investors’ 2023 returns in US retail ETFs have occurred in recent weeks. While the SPDR fund has gained 4.98% since September 30, 2023 has seen it gain just 5.69%. Half of the VanEck Retail ETF’s (RTH.O) 12.8% year-to-date gains have been produced in the last two months.

According to Schulman, retailers’ warnings of cautious, inconsistent, or weak consumer demand have scared investors in exchange-traded funds.

However, this holiday season, Thomas Hayes, chair of Great Hill Capital LLC in New York, expects better-than-expected increases in retail stocks.

“Expectations are very low, which sets the stage for a positive upside surprise,” he said.

Reporting by Suzanne McGee; Editing by Lananh Nguyen and Josie Kao

Article Source: Reuters

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