Americans have been relentlessly spending their paychecks despite rising prices, buying pickup trucks with diesel near record highs and steak dinners even as the cost of beef soars.

This is great news — until it isn’t. While retail sales and personal consumption expenditures have trended higher, so has consumer borrowing. And sentiment has cratered under the weight of persistently high oil prices and rising Treasury yields. A preliminary sentiment reading from the University of Michigan on Friday hit its lowest level in five months as inflation expectations ticked higher.

All of which has Wall Street worried that the spree is about to stop, removing a key support beam underlying a stock market that’s hovering near all-time highs.

“Consumers just can’t deal with prices going up forever,” said Eric Clark, chief investment officer at Accuvest Global Advisors. “Our wages don’t grow as fast as the inflation that we experience most of the time, so that forces consumers to make choices.”As earnings season approaches, investors and strategists are focused on determining the health of consumers. They’ll be closely watching credit card spending disclosures when the big banks start reporting this week. And they’ll be eyeing outlooks from retailers heading into the holiday shopping season.

“We’re looking for signs of exhaustion,” said Tom Hainlin, national investment strategist at US Bank. “Is there a point where higher food and gas prices finally fatigue the consumer?”Wall Street sentiment is largely bearish, with analysts steadily cutting earnings estimates for consumer discretionary and staples stocks. A combination of tariff-induced inflation and a sharp spike in oil prices drove analysts to trim forward estimates early in the year. More recently, the jump in borrowing costs — thanks to a Federal Reserve rate hike and soaring Treasury yields — has driven expectations even lower.

For the first time since the end of 2024, investors expect negative earnings growth for the consumer discretionary and staples sectors, data show. They are projected to be a drag on the S&P 500 Index’s anticipated 30% rise in profits in 2026.

While the two sectors combined account for just 13% of the S&P 500’s weighting, their weakness is considered an ominous sign for the stock market because of the importance of consumers to the economy. An outright drop in spending on holidays on big-ticket items like hot tubs that households typically buy with credit cards rather than cash would be considered an early warning sign for overall expenditures.

“The consumer can show such extreme weakness that it does erode confidence in the rest of the economy,” said Gina Martin Adams, chief market strategist at HB Wealth Management. “That would be the shock that can turn things over.”It’s not likely, however, given the recent strength in data on consumer spending and wage growth, she said. But the first signs of trouble will be a reduction in larger purchases that consumers typically borrow to buy, she added.

“Anything from a refrigerator, household furniture, autos and housing,” Martin Adams said. “It’s those interest-rate sensitive durable goods categories that show consumer weakness.”A key question is how much of the strong consumer spending data is from rising prices, with Americans doling out more money on fewer goods and services. Retail sales and personal consumption expenditures have been healthy, but they aren’t adjusted for inflation and the results from firms have been weak.

“The damage across Nike, Lululemon, Chipotle — it’s been horrendous,” Accuvest’s Clark said. “If you look at the earnings from Visa, Mastercard, American Express, Bank of America and JPMorgan, consumers are spending. Then you look at certain consumer stocks and they’re clearly not spending there.”Demand for some big-ticket items is clearly slowing. Home-improvement retailer Lowe’s Cos. cut its full-year outlook during the latest quarter as weakness persists in the housing market. Tractor Supply Co. withdrew its longer-term outlook in July as shoppers pulled back on hardware purchases.

The pain is even beginning to show up in smaller purchases. Restaurant stocks are spiraling as inflation and increased use of weight-loss drugs weigh on traffic. Sportswear firms Nike and Lululemon are embarking on turnaround programs designed to reverse sales declines. And companies that make potato chips and cereal are struggling, with Conagra Brands Inc. and Campbell’s Co. giving disappointing outlooks last month.

At McDonald’s Corp., sales of the Big Mac are dropping and the stock is down 23% in 2026, putting it on pace for its worst year since 2002.

“Anything that goes on a truck is seeing increased prices,” said Anthony Saglimbene, chief market strategist at Ameriprise Advisor Services.

Investors are already trying to get ahead of the issue, pulling huge sums out of the consumer staples and discretionary sectors, both of which have underperformed the overall S&P 500 this year. The State Street Consumer Discretionary Select Sector SPDR ETF, the biggest consumer-focused exchange-traded fund in the US, saw $638 million in net outflows in September, the most since January.

“Everybody thought, including us, that the consumer just wouldn’t hold up,” said Thomas Martin, senior portfolio manager at Globalt Investments, adding that he’s been surprised by spending levels so far. He’s slightly underweight the consumer discretionary and consumer staples sectors and prefers names with consistent customers, like Costco Wholesale Corp. and Casey’s General Stores Inc., rather than those making the consumer products.

In reality, consumer discretionary stocks are doing even worse than the sector performance would suggest since tech giant Amazon.com Inc. has by far the largest weight in the basket.

To wit, an equal-weight version of the consumer discretionary subindex, which gives Amazon.com Inc. the same heft as Domino’s Pizza Inc., is trailing the S&P 500 by roughly 21 percentage points in 2026.

“I think the stocks are telling a story of more pain in the consumer sector than maybe the economic data is letting on,” said Ross Mayfield, an investment strategy analyst at Baird.

The lingering question is whether the consumer weakness ultimately will matter in a market dominated by spending on artificial intelligence. The 25% earnings growth analysts project for the third quarter is being driven by major technology companies, as well as the energy sector’s windfalls from elevated oil prices.

That makes this period a historical anomaly for the US market, which is typically driven by sales growth and rising margins fueled by consumer spending, Mayfield said. In the current bull market, the tech sector has generated most of the gains. This lack of breadth is becoming an increasingly acute problem. The S&P 500 hit a record high last week with only a third of its constituents trading above their 50- and 100-day moving averages.

“The narrower the market is, the more susceptible it is to a problem where one things goes wrong,” said Mayfield, warning that investors shouldn’t overlook a “tepid” consumer spending story. “Then the market falls.”