Black Friday. The name conjures images of stampedes, slashed prices, and maybe a lingering sense of buyer's remorse. But what about the stock market? Is the shortened trading day on Black Friday anything more than a symbolic nod to consumerism? Let's dig into the data and see if the hype matches the reality.
Black Friday: A Half-Day of Trading, Half-Baked Insights?
The Half-Day Hustle
The New York Stock Exchange (NYSE) and Nasdaq will be open on Black Friday, but only until 1 p.m. ET. Bond markets close an hour later at 2 p.m. ET. Foreign exchanges, meanwhile, keep their regular hours. On the surface, it seems like a fairly uneventful day. Banks and postal services are open too. The question is, does this abbreviated session actually *mean* anything for investors?
Adobe Analytics projects U.S. online sales to jump 5.3% this holiday season, hitting $253.4 billion. The National Retail Federation forecasts retail sales growth between 3.7% and 4.2% year-over-year for November and December. These are decent numbers, but are they directly correlated to market performance on Black Friday itself? That's where things get interesting.
Historically, the S&P 500 has tended to rise during the period spanning the Wednesday before Thanksgiving to the week after Black Friday. Last year, the S&P 500 gained 1.5% during that stretch, according to Dow Jones Market Data. The index rose 0.8% in 2023 and 1.1% in 2022. But here's the catch: it fell 3.5% in 2021. Correlation doesn't equal causation, and a few years of positive returns don't guarantee future performance.
Black Friday: Hype or Real Market Mover?
Data vs. the Narrative
The narrative around Black Friday is one of surging consumer spending, but is that *really* reflected in the stock market's performance on that specific day? I decided to look a little deeper. I've looked at hundreds of these filings, and the daily trading volumes on Black Friday are often lower than average. Why? Because many institutional investors take the day off, leaving the field to retail traders and algorithms reacting to the holiday shopping frenzy.
This creates a situation ripe for volatility. Lower trading volumes mean that even relatively small trades can have a disproportionate impact on stock prices. The market becomes more susceptible to knee-jerk reactions and short-term speculation, divorced from the underlying fundamentals of the companies being traded.
And this is the part of the report that I find genuinely puzzling: the historical data blends the days before and after Black Friday, which doesn't isolate the impact of the day itself.
Black Friday sales are expected to increase 8.3% from 2024, reaching $11.7 billion this year. Cyber Monday, however, is still projected to be the biggest online shopping day, generating $14.2 billion in sales. So, why are we so focused on Black Friday's shortened trading day when Cyber Monday is the real digital spending powerhouse?
So, What's the Real Story?
Black Friday's shortened trading day is more of a cultural artifact than a significant market event. The historical data is skewed, the trading volumes are lower, and the focus is disproportionate to its actual impact. It's a blip on the radar, not a seismic shift. Investors would be better served focusing on broader economic trends and individual company performance rather than trying to time the market based on Black Friday's hype.
