Wall Street has been on an astounding rally, buoyed by excitement over President-elect Trump’s policies and the Fed rate-cutting cycle, although escalating conflict between Ukraine and Russia continues to dent sentiments. This trend is likely to continue, given that the holiday-shortened Thanksgiving week tends to be a bullish feast for stock investors, even with low volumes.
Per researchers, over the past 50 years, the S&P 500 Index has gained 0.6% on average during the week, with 70% of the returns coming in positive (read: What Lies Ahead for S&P 500 ETFs in 2025?).
Investors seeking to cash in on big gains could consider leveraged ETFs as these fetch outsized returns on quick market turns in a short span. We have highlighted five funds expected to benefit the most from the solid Thanksgiving trend. These are Direxion Daily Consumer Discretionary Bull 3X Shares (WANT), Direxion Daily Retail Bull 3X Shares RETL, MAX Airlines 3X Leveraged ETN JETU, Direxion Daily Travel & Vacation Bull 2X Shares OOTO and MicroSectors Travel 3x Leveraged ETN FLYU.
Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives (see: all the Leveraged Equity ETFs here).
Thanksgiving Spending to Remain Strong
Consumer spending is expected to reach $125 billion this Thanksgiving weekend, down from $129 million in the last-year period, per the latest International Council of Shopping Centers' survey. Millennials and Gen X shoppers are expected to lead spending, with an average of $628 and $629, respectively. Baby boomers are expected to spend an average of $444.
About 66% of those who plan to shop over the Thanksgiving weekend will use deals and discounts to stock up on necessary items unrelated to holiday shopping. Still, 84% plan to spend on holiday gifts for others. This will be followed by spending on dining (76%), other holiday-related items (73%), entertainment and activities (56%), and personal services (56%).
According to the National Retail Federation, an estimated 183.4 million people are planning to shop in stores and online from Thanksgiving Day through Cyber Monday this year. This is up from a previous record of 182 million in 2023. Black Friday is the most popular day to shop, with 72% planning to head out to stores or shop online, followed by 39% on Cyber Monday.
Americans are bracing for a cheaper Thanksgiving dinner this year due to lower turkey prices. The average cost of serving 10 people for Thanksgiving is expected to be $58.08 ($5.81 per head), down 5% year over year and will represent the lowest level since 2021, according to the American Farm Bureau Federation's annual Thanksgiving dinner cost survey.
Travel to Make New Records
Travel service provider American Automobile Association expects 2024 to be the busiest Thanksgiving travel season in the United States, setting records. About 79.9 million people will travel 50 miles or more from home this Thanksgiving. This suggests an increase of 1.7 million from last year. Of them, 71.74 million will go on road trips, 5.84 million will fly and the remaining 2.28 million will travel by train, bus or cruise.
Airline companies also expect record travel demand this Thanksgiving week. The Transportation Security Administration expects to screen 18.3 million airline passengers from Nov. 26 to Dec. 2, up nearly 6% from the last year.
ETFs to Make the Most
Direxion Daily Consumer Discretionary Bull 3X Shares (WANT)
Direxion Daily Consumer Discretionary Bull 3X Shares offers leveraged exposure to the consumer discretionary sector. It provides three times exposure to the Consumer Discretionary Select Sector Index, charging 95 bps in annual fees. Direxion Daily Consumer Discretionary Bull 3X Shares has an AUM of $29.6 million and an average daily volume of 28,000 shares.
Direxion Daily Retail Bull 3X Shares (RETL)
Direxion Daily Retail Bull 3X Shares offers three times leveraged exposure to the S&P Retail Select Industry Index. Direxion Daily Retail Bull 3X Shares has amassed $46.3 million in its asset base and charges 93 bps in fees per year. It exchanges around 261,000 shares a day on average.
MAX Airlines 3X Leveraged ETN (JETU)
MAX Airlines 3X Leveraged ETN is linked to a 3X times leveraged participation in the daily performance of the Prime Airlines Index, charging 95 bps in annual fees. It has accumulated $4.4 million in its asset base and trades in an average daily volume of 400 shares.
Direxion Daily Travel & Vacation Bull 2X Shares (OOTO)
Direxion Daily Travel & Vacation Bull 2X Shares seeks two times the performance of the BlueStar Travel and Vacation Index. It charges 95 bps in annual fees and trades in a volume of 10,000 shares. It has an AUM of $7.6 million.
MicroSectors Travel 3x Leveraged ETN (FLYU)
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $10 million in its asset base and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 2,000 shares per day, on average (read: Best Leveraged or Inverse ETFs Midway in Q4).
Bottom Line
Investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, daily rebalancing, when combined with leverage, may make these products deviate significantly from the expected long-term performance figures.
For ETF investors who are bullish on the Thanksgiving Week spending forecast, the above products can be an interesting choice. A near-term long could be intriguing for those with high risk tolerance and a belief that the trend is the friend in this corner of the investing world.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
