NEW YORK, Nov 21 – Amid the decline in the American stock market this month, investors next week will be looking for signs of strength in US consumer spending. Black Friday will be the main highlight as it marks the beginning of the holiday shopping season.
The stock market’s rise came to a halt in November. The benchmark S&P 500 index has dropped more than 4% so far this month. Even a positive earnings report from semiconductor giant Nvidia failed to soothe market anxieties last Thursday. Investors remain concerned about high stock valuations and doubts regarding the potential returns from companies’ massive investments in artificial intelligence infrastructure.
Because consumer spending accounts for more than two-thirds of US economic activity, this sector is now the main focus of Wall Street.
The trading week will be interrupted by the Thanksgiving holiday on Thursday, followed by Black Friday, which is synonymous with big discounts, then Cyber Monday and a series of year-end shopping promos.
Recent data shows a drop in consumer sentiment, and several other economic reports were delayed due to a temporary government shutdown. This situation makes any signal about holiday spending more important than usual.
“From a sentiment standpoint, the early Black Friday and Cyber Monday data will be absolutely crucial given the lack of other economic data available,” said Chris Fasciano, chief market strategist at Commonwealth Financial Network.
“Overall, the results from the holiday shopping period will provide a key snapshot of the consumer’s health and the impact on the economy.”
Although the S&P 500 is still up 11% since the start of the year, the index has fallen more than 5% from its record high in late October. The Cboe Volatility Index recorded its highest close since April last Thursday.
Stock market performance also has the potential to affect consumer spending, especially for high-income earners who hold significant assets in stocks. Despite the recent wobble, the S&P 500 has still surged more than 80% since the start of the current bull market about three years ago.
“If there is a drop, it could hit the wealth of upper-income groups that are heavily tied to the stock market… so it will be interesting to see if their spending patterns change,” said Doug Beath, global equity strategist at Wells Fargo Investment Institute.
This month, the National Retail Federation projected that US holiday sales would exceed US$1 trillion for the first time. However, growth in November–December sales is only expected to reach 3.7% to 4.2% compared to the previous year, slower than the 4.3% growth recorded in 2024.
According to Michael Pearce, deputy chief US economist at Oxford Economics, household balance sheets are actually still very strong, but a slowdown in job growth could pressure holiday spending.
“The most important factor for consumer spending is the health of the labor market,” Pearce said.
A delayed monthly employment report, released last Thursday, showed US job growth accelerating in September. However, the unemployment rate rose to 4.4%, its highest level in four years.
Persistently high inflation — exacerbated by import tariffs making goods more expensive — also has the potential to limit consumers’ ability to spend, Pearce added.