The U.S. stock market has set multiple records in 2025, but consumer stocks have largely missed the rally. This week, major consumer companies are set to report earnings, with investors bracing for further turbulence. Apparel makers, restaurant operators, and footwear retailers have underperformed sharply—Lululemon Athletica (LULU.US), Chipotle Mexican Grill (CMG.US), and Deckers Outdoor (DECK.US) have each plunged over 45% this year. Even essential goods sellers like grocers, liquor producers, and household product retailers lagged, with Brown-Forman (BF.A.US), Hormel Foods (HRL.US), and Target (TGT.US) down at least 27%. Excluding Amazon (AMZN.US) and Tesla (TSLA.US)—classified as consumer firms under S&P Global’s system but largely driven by AI hype—the S&P 500 Consumer Discretionary sector has flatlined in 2025.

The consumer slump reflects mounting pressures on American households. Persistent corporate layoffs have softened the labor market, while Trump-era tariffs keep prices elevated for food, apparel, and electronics. Soaring mortgage rates further strain budgets. This week, earnings from McDonald’s (MCD.US), DoorDash (DASH.US), and Wynn Resorts (WYNN.US) will shed light on sector trends, though Walmart (WMT.US)—a key bellwether—won’t report until November 20. McDonald’s Wednesday premarket results missed revenue and adjusted EPS estimates but beat on global same-store sales growth (3.6% vs. 3.55% expected).

The AI rally has masked consumer woes, creating a "barbell" market: tech giants soar while most stocks buckle under spending pressures. The S&P 500 Tech sector is up 27% this year. BofA’s Savita Subramanian notes Amazon and Tesla’s earnings obscure profit declines elsewhere in consumer discretionary, with staples expected to drop 1%. She warns labor softness may "dent future consumption," with cracks already emerging. Ned Davis Research data shows just 5% of S&P 500 staples stocks outperformed in six months—among the worst ratios in 50 years.

With government shutdowns muddying jobs data, investors now track layoff announcements. UPS’s (UPS.US) shock 34,000-job cut on October 28 followed Amazon’s 14,000 corporate reductions and Target’s 8% workforce trim. While 22V Research’s Dennis DeBusschere calls layoffs a "major concern," some on Wall Street see silver linings. Citi’s Adam Pickett and Dirk Willer dub this "jobless prosperity," arguing AI-driven cuts could spur Fed easing—fueling stocks, AI capex, and further layoffs in a self-reinforcing cycle. They maintain bullishness, citing early-stage "overheating" risks for 2026.