Feasting On Profits: Does Thanksgiving Week Cook Up Stock Market Gains?

November stands out as a beacon of positivity in the U.S. stock market. Over the past 151 years, the S&P 500 has seen an average gain of 0.88% during November, ranking it as the third-best month of the year.

But does this November vigor extend into Thanksgiving week?

Chart: November’s Seasonality Is Bullish Month For The S&P 500

Thanksgiving Week: Does November’s Strength Hold?

Rocky White, a senior quantitative analyst at Schaffer’s Investment Research, provided a clear answer in a recent study.

Over the last 50 years, the S&P 500 has experienced an average gain of 0.54% during Thanksgiving week, with 68% of these instances showing positive returns. This is a notable increase compared to the average weekly gain of 0.16% observed throughout the year.

Dow Jones Market Data supports these findings. Their analysis, stretching back to 1950, indicates that the S&P 500 has risen 49 out of 72 times during Thanksgiving week, equating to a 68% success rate. On average, the performance was 0.6% during the holiday week.

Interestingly, the period between Wednesday and Friday of the holiday week (the markets are closed on Thursday) is particularly strong, with the S&P 500 climbing 60 out of 72 times.

These data convincingly validate the existence of above-average returns during the November holiday week for the U.S. stock market.

The Influence Of Holiday Shopping, And Retail’s Outperformance

“Although the stock market might see some movement following Thanksgiving and Black Friday, the effects will likely be short lived,” Elana Duré, vice president and head of the content studio for J.P. Morgan Wealth Management, wrote in a study.

Duré suggests that Thanksgiving and Black Friday sales act as a “sentiment indicator” for the market. Strong retail numbers during this period could signal the start of a robust shopping season, potentially boosting stock prices.

The retail sector particularly stands out in this period, according to the J.P. Morgan’s study. Between 2011 and 2021, the S&P Retail Select Index, as closely monitored through the SPDR S&P Retail ETF XRT, showed an average gain of 1.72% during the holiday week.

Despite the positive trends, caution is advised. The correlation between Black Friday sales and a company’s Q4 performance isn’t always direct, Duré warns. Thus, investors should assess a company’s overall health rather than solely focusing on holiday sales figures.

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