Santa’s Rally Returns. Will Retail Stay on the Nice List?

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What’s Driving Retail Now

• Holiday Sales Hitting New Highs: The National Retail Federation (NRF) expects total holiday sales to surpass $1 trillion for the first time—an important tailwind as retail stocks try to reclaim upside momentum.

• Online Shopping Breaks Records: Adobe Analytics projects 5.3% year-over-year growth in online holiday sales, reaching $253.4 billion, with Cyber Week driving a key portion of the surge.

• Shopping Patterns Shifting—Value Matters Now: Cyber Week and Black Friday data show that consumers are prioritizing bargains and stretching budgets—shifting demand toward discount-oriented retailers and value chains, while luxury purchases stay resilient.

Together, these trends point to solid—though highly price-sensitive—consumer demand heading into the final weeks of the year.

What the Index Says: Broader Retail Strength

The S&P Retail Select Industry Index* offers a useful window into how this sector is faring:

• The modified, equal-weighted index includes a broad cross-section of retailers, from big-box and value players to specialty and apparel chains. This may help diversify exposure and smooth out performance swings tied to any one retailer.

• Despite 2025’s rougher patches for consumers (inflation*, cautious sentiment), the index was up about 8.5% year to date as of December 9, according to S&P Dow Jones Indices.

For short-term traders, this broad strength creates an attractive setup—especially if the holiday surge leads to follow-through in early 2026.

Why Bulls Are Watching Retail

• Pent-up Demand and Holiday Urgency: With shoppers focused on discounts and gift lists, chains that stock necessities or popular gift items are seeing a surge. Names ranging from essential-value players to apparel and electronics chains may be poised to benefit.

• E-commerce and Omnichannel Gains: The continued shift to online, plus use of digital tools and buy-now/pay-later plans, is helping even price-conscious shoppers find what they want, lifting online conversion rates and overall retail activity.

• Index-Level Exposure Reduces Company-Specific Risk: Because the S&P Retail Select Industry Index is relatively broad and diversified, a strong holiday season can buoy many names at once, making a broad-based retail rally more probable than a hit-or-miss for single companies.

If holiday momentum carries into January and February, retail stocks could enter 2026 with stronger footing than many expect.

What Bears Point To—And What Could Go Wrong

• Consumer Strain Remains Real: Inflation, tariffs, and soft wage growth continue to weigh on lower- and middle-income households. Even if average holiday spend looks healthy, many families are stretching budgets, trading down, or skipping non-essentials. That could limit upside beyond the holidays.

• Sentiment Still Fragile: Consumer confidence is still well below 2024 levels, according to Reuters, raising questions about demand durability after holiday promotions end.

• Seasonality—Limited Runway Beyond December: Retail sales often cool sharply in Q1. If macro headwinds return—higher interest rates, sticky inflation, softer job data—retail could give back gains quickly.

• Not All Retailers May Benefit Equally: Discount and essentials retailers may hold up better than discretionary-focused apparel or specialty chains, which are vulnerable to spending pullbacks.

A Trading Vehicle for Seasonality

For traders bullish on a holiday-fueled retail rebound, RETL offers a leveraged way to express that view: Direxion Daily Retail Bull 3X Shares (Ticker: RETL).

RETL seeks daily investment results, before fees and expenses, of 300% of the performance of the S&P Retail Select Industry Index.

Below is a daily chart of RETL as of December 10, 2025.

Source: StockCharts.com

Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.

The performance data quoted represents past performance. Past performance does not guarantee future results.

Because it’s tied directly to the broader retail index—rather than any single company—RETL gives exposure to the full basket of retail players. That makes it a potentially clean way to trade a sector-wide holiday rally or a broader consumer rebound.

The Coming Test: Will Holiday Strength Hold Into 2026?

The next few weeks will tell whether this season’s optimism was a fleeting boost or the start of a sustained rebound. Key hinges include:

• How retailers report upcoming earnings, especially key names such as Macy's (Ticker: M), Walmart (Ticker: WMT), and other big-box chains. Specifically, will their comps hold up vs. last year’s holiday surge?

• Whether consumer sentiment and spending power improve (or at least stabilize), particularly as inflation and cost-of-living pressures persist.

• If online and omnichannel trends—discounts, buy-now-pay-later, early-bird deals—continue to accelerate, sustaining demand beyond the typical holiday cycle.

If these variables line up, retail could enter 2026 stronger than markets expect. If not, this year's holiday lift might prove temporary.

* Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.

The S&P Retail Select Industry Index (SPSIRETR) is a modified equal-weighted index that is designed to measure performance of the stocks comprising the S&P Total Market Index that are classified in the Global Industry Classification Standard (GICS) retail sub-industry. One cannot invest directly in an index.

The “S&P Retail Select Industry Index” is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Rafferty Asset Management, LLC (“Rafferty”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Rafferty. Rafferty’s ETFs are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Retail Select Industry Index.

Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.

Leverage Risk – The Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day even if the Index does not lose all of its value. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with the Index and may increase the volatility of the Fund.

Daily Index Correlation Risk – A number of factors may affect the Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.

Retail Industry Risk – Retail and related industries can be significantly affected by the performance of the domestic and international economy, consumer confidence and spending, intense competition, changes in demographics, and changing consumer tastes and preferences.

Consumer Discretionary Sector Risk —Companies in the consumer discretionary sector are tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.

Additional risks of the Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, and Passive Investment and Index Performance Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.

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