As fall has officially begun, major retailers like Target, T.J. Maxx, and Starbucks have wasted no time in embracing the season. Their shelves are filled with Halloween-themed knickknacks, home goods, and the iconic pumpkin-themed plastic cups. This strategic move seems to have paid off, as these retailers are experiencing a surge in sales and potentially boosting their stocks.
According to Dow Jones Market Data, from 1972 to 2022, shares of Target and TJX (the parent company of T.J. Maxx and HomeGoods) have averaged gains of 3.2% and 3.9% from August to November, respectively. Starbucks has seen even more impressive results, with an average increase of 10% during the same period from 1992 to 2022. Furthermore, foot traffic has seen a consistent growth over the past four years. In 2022 alone, Target, T.J. Maxx, HomeGoods, and Starbucks witnessed a significant rise in foot traffic compared to 2018, with increases ranging from 2.5% to 21.5%, according to Placer.ai data.
This uptick in shoppers coincides with the growing popularity of TikTok, which began around 2019. One particular seasonal trend that has caught TikTok users' attention is a white ghost-shaped pillow and a collection of ghost-patterned blankets available at HomeGoods and T.J. Maxx. Numerous videos on the platform showcase these cozy throws adorning couches and beds, fueling the demand further. The hashtag "ghostblanket" alone has garnered an impressive 55.5 million views on TikTok.
Despite the buzz surrounding TikTok-driven trends, Target's stock has experienced a decline of 24.4%, and Starbucks is down by 5.6% for the year 2023. However, TJX has managed to buck the trend, showing a 12% increase. It is crucial to note that these retail companies are facing ongoing challenges such as inflation, rising gas prices, and the resumption of student loan repayments. While fall-themed decor and products can attract customers, ultimately, they may not be enough to address these broader economic issues.
Recap of Last Week's Market
Last week, investors kept a close eye on the Federal Reserve as they anticipated possible policy changes. Despite economists' predictions, the Fed opted to maintain the status quo. However, various concerns loomed over the financial landscape, including an impending auto worker strike, the likelihood of a government shutdown, and oil prices inching closer to $100 a barrel. As a result, stock markets saw a sharp decline and bond yields surged. The Dow industrials dropped 1.89%, the S&P 500 experienced a loss of 2.93%, and the Nasdaq Composite took a hit of 3.62%.
The United Auto Workers (UAW) has expanded its strike against General Motors and Stellantis, but Ford has been spared. Additionally, the union representing Ford workers in Canada has reached a tentative agreement. In separate news, the Federal Trade Commission has filed a lawsuit against private-equity firm Welsh, Carson, Anderson & Stow over a roll-up of anesthesiology practices. The Securities and Exchange Commission has also voted to crack down on fund names that do not accurately reflect their holdings.
Meanwhile, Rupert Murdoch, the longtime News Corp and Fox Chairman, at the age of 92, has announced his retirement. His son, Lachlan Murdoch, will be succeeding him.
Maplebear, the parent company of Instacart, experienced a 12% increase on its debut but then declined. Similarly, digital marketer Klaviyo rose 23% but also fell back. The Wall Street Journal reported that Goldman Sachs is currently in talks to sell specialty lender GreenSky to a group including Pimco, KKR, and Sixth Street for $500 million, which is less than a third of what Goldman paid for it in 2021. Additionally, Cisco Systems has agreed to acquire cybersecurity firm Splunk for $28 billion. Furthermore, a U.K. regulator has approved Microsoft's amendments regarding its Activision Blizzard deal.
Two retail giants are set to announce their earnings. Costco Wholesale will report after closing on Tuesday, followed by Nike on Thursday. Costco's shares have risen by 22% this year, partially due to the resilient consumer spending in the U.S. Despite this, Nike's stock has experienced a 22% decline due to weakness in China, which is its third-largest market in terms of revenue.
The Census Bureau will release the durable goods report for August. Economists predict that new orders for durable manufactured goods will show a 0.4% decline month over month, following a significant 5.2% drop in July. This was the largest decrease since the early days of the pandemic in April 2020.
Bureau of Labor Statistics Releases Personal-Consumption Expenditures Price Index for August
The highly anticipated release of the personal-consumption expenditures (PCE) price index for August is here. Experts estimate that the PCE will show a year-over-year increase of 3.4%, slightly surpassing July's gain of 3.3%.
The core PCE, which is the Federal Reserve's preferred inflation gauge as it excludes food and energy prices, is predicted to rise by 3.9%. Although this is three-tenths of a percentage point lower than the previous expectation, it still remains too high for the Fed. In fact, the core PCE is currently 1.2 points below its post-pandemic peak in February 2022. This news has led the Fed to hint that interest rates are likely to stay elevated for a prolonged period.