Three ETFs Influenced By Black Friday

With Thanksgiving right around the corner, the nation’s single busiest shopping day is about to unleash, and whether or not the retail sector will get a boost this holiday season is ambiguous, however, the Retail HOLDRs (RTH), the iShares Dow Jones US Consumer Services (IYC) and the SPDR S&P Select Retail (XRT) are likely to be influenced regardless of the outcome.

A poll conducted by the National Retail Federation shows that up to 138 million shoppers may visit the nation’s shopping malls over the Black Friday weekend, an increase of nearly 3 percent from last year.  Many are expected to flock to the blockbuster bargains that are being offered by retailer like Wal-Mart (WMT), Target (TGT) and Best Buy (BB).  Wal-Mart is expected to offer DVDs for as little as $1.96, Blue-Ray Disc Movies for $10 and some kitchen appliances for under $3, while Target is following a similar path and is also expected to offer a 40 inch LCD HDTV for under $300 and Best Buy is advertising netbook computers starting at under $150.   

On the positive side for retailers, it appears that consumers have already adjusted their spending habits and have started to open up their wallets.  According to the Commerce Department, retail sales trended upward for the fourth straight month in a row in October indicating that consumption growth could be gaining some traction. 

On the negative side, special promotional sales put together by retailers to entice consumers during the year may end up having an adverse affect and on Black Friday revenues in that some consumers may have already made their big purchases for the year. 

At the end of the day, there will be a lot of traffic in and out of retail stores on Black Friday with numerous deals to capitalize on.  Regardless of whether or not consumers will act on these deals and continue the recent upward trend of spending, the aforementioned ETFs will likely be influenced.

  • Retail HOLDRs (RTH), which includes 18 holdings in the retail sector and allocates 19.63% of its assets to Wal-Mart, 8.57% to Target and 3.83% to Best Buy.
  • iShares Dow Jones US Consumer Services (IYC), which is a highly diversified play on the retail sector including 194 different holdings of companies in the retail sector and allocating 7.31% of its assets to Wal-Mart and 2.34% to Target.
  • SPDR S&P Select Retail ETF (XRT), which includes 66 different holdings of companies who derive their revenues through consumer spending.

To help protect from the downside risks involved with investing in the retail sector, such as macroeconomic forces like unemployment, the use of an exit strategy is a good idea.  Such a strategy can be found at

Disclosure:  No Positions

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