While shoppers have been gearing up for the holiday season and making lists of potential gifts, Wall Street has been growing wary.

For the first time in history, two of the S&P 500’s key consumer sectors were languishing at the bottom of the stock market in terms of sector performance, hinting that American households may be finally pulling back on spending.

The S&P 500’s consumer-discretionary and consumer-staples sectors haven’t fallen this much together on an annual basis since 1990, according to Bespoke Investment Group. They have been among the worst performers on the large-cap benchmark index so far in 2025, with both remaining nearly flat for the year, while the broader index has risen about 11%, according to FactSet data.

If the year ended on Thursday, it would mark the first time since 1990 that the consumer-discretionary sector finished as the S&P 500’s worst-performing sector, and the only time both consumer-related sectors ranked as the two weakest corners on the stock market, a team of analysts at Bespoke said in a Thursday client note (see chart below).

Additionally, neither consumer-related sector has been a market leader at any point so far in 2025, and both have been in a significant downturn since the start of October, when the longest U.S. government shutdown began.

“While only four stock sectors on the S&P 500 have recorded positive returns since October, consumer staples is down three times more than the S&P 500, and consumer discretionary is the worst-performing sector with a decline of 5.2%,” said the Bespoke team (see chart below).

“Consumer spending accounts for roughly 70% of the U.S. economy, so as much as the market focuses on AI and earnings from Nvidia, from an economic perspective, consumer activity represents a much more significant variable,” said the Bespoke team.

The Bespoke analysts acknowledge that the stock market and the economy don’t always move in lockstep, and the weakness in consumer sectors could be nothing more than a valuation reset, but “it is also something that policymakers shouldn’t ignore — especially if you subscribe to the view that markets are always forward-looking,” they added.

To be sure, recent economic data, though scarce and delayed by the government shutdown, showed consumers sentiment was steady even amid a cooling labor market. Consumers were feeling more optimistic about the labor-market outlook in October, according to a survey from the Conference Board late last month. The September employment report on Thursday, showed the U.S. economy created 119,000 new jobs, the most since April, but the unemployment rate climbed to 4.4%, the most since the pandemic.

However, earnings have been telling a more muddled story. Shares of Target Corp. tumbled nearly 7% so far this week after the company on Wednesday posted a drop in quarterly sales andlowered its full-year profit guidanceas the big-box retailer saw caution among its consumers. Home Depot Inc.’s stock also was off over 8% this week as the home-improvement retail giantmissed fiscal third-quarter profit expectationsand provided a downbeat outlook.

Walmart Inc. provided a more upbeat picture of consumer demand. Its shares surged 6.5% on Thursday alone after the discount retail behemothhit a home run with its fiscal third-quarter report, and raised its full-year outlook.

Both Target and Walmart operate in the S&P 500’s consumer-staples sector, while Home Depot is a consumer-discretionary firm, according to FactSet data.

Stocks in the consumer-staples sector often contrast with consumer-discretionary names, which provide nonessential goods and services. Shares of staples companies — which cover essentials that consumers would purchase and use regardless of the state of the economy — are thus identified as defensive and may help to hedge portfolio risks, while discretionary stocks are cyclical, since consumers tend to spend less during an economic slowdown or a recession. As a result, the two sectors rarely move in tandem.

U.S. stocks finished sharply lower on Thursday, with all three major indexes giving back their earlier sharp gains as investors worried about the labor market and lost confidence around the odds of the Federal Reserve cutting rates again in December. The S&P 500 closed 1.6% lower, while the Dow Jones Industrial Average fell 0.8% and the Nasdaq Composite slumped 2.2%, according to FactSet data.