Why a blockbuster cyber Monday in US won't lift up Wall Street's spirit

Shoppers will spend an estimated $7.8 billion on Cyber Monday -- a record -- boosting a strong holiday shopping season. And Wall Street will likely shrug it off.

Even a blockbuster holiday won’t divert the market’s attention from the rising interest rates that could hurt car and home sales next year and the escalating trade war between the U.S. and China that’s expected to slow global economic growth. US President Donald Trump in September imposed 10 percent tariffs on approximately $200 billion worth of Chinese imports and plans to raise the levy to 25 percent in January, which will drive prices higher.

Fears about a consumer spending slowdown in 2019 outweigh any positive signs of a strong holiday, said Tom Forte, analyst at DA Davidson & Co.

“Many of the tariffs will likely be borne by consumers in the second half of 2019 in the form of higher prices on products,” he said. “Higher interest rates may dampen spending on big-ticket items.”

Companies like Amazon.com Inc., Walmart Inc. and Target Corp. that are fighting to win holiday spending online may not see an immediate pay-off in terms of their market value. U.S. shoppers will spend an estimated $124.1 billion online in November and December, up 14.8 percent from a year earlier, according to Adobe.

Purchases on Black Friday, traditionally the best day for sales on electronics, totaled $6.22 billion, up 23.6 percent from a year ago, Adobe data show. Spending on Cyber Monday, usually the best day for toy sales, is expected to increase 17.6 percent.

Total holiday retail spending -- in stores and online -- in November and December will grow by more than 5 percent for the second consecutive year, a first since before the Great Recession about a decade ago, said Craig Johnson, president of Customer Growth Partners. Investors may be worried about whether that pace can be sustained, even though it is grounded in low unemployment and wage growth rather than the heavy use of credit that led to the financial crisis, he said.

“The strong consumer and retail spending we are seeing now is coming off of this healthy foundation, which is much more sustainable than the credit bubble we saw 12 years ago,” Johnson said.

Cyber Monday has its roots in people returning to work from a long Thanksgiving weekend and using the fast internet connections of their office computers to search for the best deals. Such connections are prevalent now in homes and on smartphones, which should make the day less important. But shoppers are still conditioned to hunt for online deals, and retailers try to meet that expectation.

“Even though you see all these pre-Black Friday sales, people concentrate their spending on Cyber Monday," said Taylor Schreiner, director of Adobe Digital Insights.