The back-to-school shopping season has just ended. In a blink, we'll be shopping for the holidays. That's should add up to a lot of shopping - but we'll see how secure consumers are feeling about their finances. Shopping patterns offer great insight into the state of consumers, who are the backbone of the U.S. economy (accounting for two-thirds of GDP). It's still a little early for some of the bigger industry groups to put out their holiday estimates, but we do have some data points to consider. Overall, the National Retail Federation expects retail sales to increase 2.5%-3.5% for the entire year. Stastista expects a 4% increase in holiday sales for 2024 compared to 2023. eMarketer forecasts a healthy 4.8% rise in holiday sales compared to last year. Salesforce predicts a 2% increase in 2024 holiday sales, which is still growing but at a slower pace than the 3% logged last year. In sum, consumer spending growth could be between 2%-5% this holiday period. Meanwhile, Forbes notes the following particulars about this upcoming holiday season: 1) it is shortened, with only 27 days between Thanksgiving and Christmas; 2) past presidential election years have shown a dip in spending leading up to and following the election; and 3) Walmart and Amazon account for roughly 38% of total retail growth, presenting a challenge for other retailers. The following is a list of BUY-rated stocks in Argus' Universe of Coverage. These represent companies that are leaders in the retail industry. Some of these stocks are also in various Argus portfolios.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

Target serves as the nation’s seventh-largest retailer, with its strategy predicated on delivering a gratifying in-store shopping experience and a wide product assortment of trendy apparel, home goods, and household essentials at competitive prices. Target’s upscale and stylish image began to carry national merit in the 1990s—a decade in which the brand saw its top line grow threefold to almost $30 billion—and has since cemented itself as a leading US retailer. Today, Target operates over 1,950 stores in the United States, generates over $100 billion in sales, and fulfills over 2 billion customer orders annually. The firm’s vast physical footprint is typically concentrated in urban and suburban markets as the firm seeks to attract a more affluent consumer base.

The movements of the 10-Year Treasury could be much more important to the economy than the fed funds rate -- three-times as important, according to a Fed "rule of thumb" that Nobel Prize winner and former Fed Chairman Ben Bernanke mentions in his 2022 book 21st Century Monetary Policy. "Because many economic decisions -- such as a household's purchase of a house or a company's investment in new plant and equipment -- depend on longer-term interest rates, a given decline in long-term rates provides more stimulus than the same reduction in the very short-term federal funds rate." Bernanke added that "A rule of thumb derived from empirical macroeconomic models is that a percentage point reduction in the ten-year yield has the stimulative power of a 3 percentage point reduction in the funds rate." This three-to-one ratio was often cited by Federal Reserve staff, Bernanke says in a footnote to the book. The Proxy Funds Rate, an analytical tool tracked and updated monthly by the Federal Reserve Bank of San Francisco, recognizes that central bankers in the twenty-first century use multiple tools to meet their "dual mandate" of stable prices and maximum sustainable employment. The Proxy Funds Rate uses the analysis of 12 financial variables to translate the full range of policy actions into an analogous level of the funds rate that can help assess whether policy is tighter or easier than the official funds rate suggests. In a November 2022 San Francisco Fed Economic Letter, the developers of the rate noted the following: "As the FOMC increasingly used forward guidance and the balance sheet, the proxy rate has tended to lead the actual funds rate, reflecting the fact that financial markets are forward looking." The proxy rate has declined to 5.36%, from more than 7% in July 2023. The 10-year Treasury yield has declined by approximately 90 basis points since reaching 4.7% in late April. This could boost the economy and offset some of the drag from rising unemployment.