Adobe Analytics noted that online shopping should tick higher during the holidays this year, creating opportunities for traders to take advantage of retail and consumer spending ETFs.
Adobe is predicting that online sales will rise 5.3% between November 1 and December 31. That is 3.4% less compared to the previous year. It also falls below the 12.75% average from 2017 to 2024. However, that figure is largely influenced by the 32.1% jump witnessed during the pandemic in 2020.
The prospect of lower interest rates ahead could help holiday sales by assisting with financing big ticket items. Nonetheless, other systematic risks in the economy like tariffs and still-high inflation could serve as headwinds.
“You have consumers dealing with a lot in the broader economy,” said Vivek Pandya, director at Adobe Digital Insights, though holiday sales could help ease some of the macroeconomic pressure.
“The holiday season is one of the areas where they do feel much more of an onus and a drive to get the goods they need,” Pandya added. “We’re seeing them willing to spend and capitalize on these sales moments.”
Despite the economic challenges, spending has been resilient this year, according to research firm Deloitte. They note thus-far muted signs of tariff costs affecting consumers.
“US consumers have been resilient in recent months, with real personal consumption expenditures rising 1.6% between the first and second quarters on an annualized basis,” they said, adding that consumer spending is expected to stay relatively strong through the rest of the year before tapering off in 2026.
2 ETF Opportunities
If Adobe’s forecasts are correct and retail sales jump after the major holiday sales events, traders will want to take a look at the Direxion Daily Retail Bull 3X ETF (RETL). The fund offers 3x exposure to the S&P Retail Select Industry Index, which applies equal weighting to constituents within the S&P Total Market Index that are classified in the Global Industry Classification Standard (GICS) retail sub-industry.
For a more broad play on increased spending in general, traders may consider the Direxion Daily Consumer Discretionary Bull 3X ETF (WANT). The fund provides exposure to 300% of the performance of the Consumer Discretionary Select Sector Index. Constituents found in the index include companies from the consumer discretionary sector which includes the following industries: media; retail (specialty, multiline, internet & catalog); hotels, restaurants & leisure; textiles, apparel & luxury goods; household durables; automobiles; automobile components; distributors; leisure equipment & products; and diversified consumer services.
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