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Are holiday shoppers saying bah humbug so far?



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Wall Street's main U.S. indexes up slightly

Real estate weakest S&P 500 sector; energy leads gainers

Dollar up; bitcoin up ~1%, crude up <2.5%; gold slides >1%

U.S. 10-Year Treasury yield jumps to ~4.24%

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ARE HOLIDAY SHOPPERS SAYING BAH HUMBUG SO FAR?

It is the season for the so-called Santa Clause rally on Wall Street - with the market often rising as investors take heart to see consumers head to the stores.

But Morgan Stanley economist Sarah Wolfe's research points to sluggish holiday shopping with her estimate for retail sales excluding food, auto, gas and building materials suggesting a 0.1% decline for November after a 0.2% increase in October.

While Wolfe sees e-commerce sales showing less weakness than brick and mortar store sales, she cited a "notable deceleration in retail sales and overall consumer spending in Q4."

While retailers are "competing for a budget pool that is similarly sized to last year," they will have to offer competitive prices to lure shoppers inside.

Citing the firm's survey released a few weeks ago she noted that 69% of holiday shoppers said they were "waiting for retailers to offer discounts before starting their holiday shopping." Specifically, Wolfe says shoppers are looking for average discounts of 30% before opening their wallets.

And the survey also revealed a services preference over goods this holiday shopping season, Wolfe said.

In the last couple of weeks, the read on Holiday shopping/Black Friday sales still seemed in line with MS growth expectations, which are for slower sales than last year but in line with historical trends after inflation is taken into account, the economist said.

With this in mind, Wolfe cut her real PCE forecast from 2.1% to 2.0% Q/Q annualized growth in 4Q23 but kept the real GDP forecast intact at 1.0%.

On Friday, the S&P 500 retail index .SPXRT was up 0.1% on the day. It is up 1.5% since Nov. 22, the last trading day before Black Friday, which is the the unofficial start of the holiday shopping season.

(Sinéad Carew)

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