Consumer sentiment is plunging. Wall Street sees a tired US shopper as a major risk to stocks.

Americans aren’t feeling great about the economy, and it’s translating to a weaker outlook for spending.

That isn’t good news for the stock market, and Wall Street is eyeing the risk of weaker corporate earnings as consumers pull back.

Consumer Confidence clocked in at 92.9 in March, its lowest level since 2021, according to the Conference Board’s latest survey.

The Conference Board’s Expectations Index, which reflects how consumers feel about their income, business conditions, and the job market, also fell to a reading of 65.2. It’s the most pessimistic consumers have been about the economy in 12 years, and well below the key threshold of 80, which has historically been associated with a recession, the Conference Board said.

Consumers feeling dour about the economy is a real risk to the market — particularly if Americans start to pull back on spending, Wall Street forecasters say.

UBS Global Research said weaker consumer spending was one factor that played into its bear case for the stock market. In a note last week, strategists said they saw the S&P 500 extending its correction to 5,300. After stocks saw a slight rebound on Monday, that implies the benchmark index could drop 8% from current levels.

Meanwhile, 12-month forward earnings growth expectations in the US could drop as low as 6%, the firm estimated, down from 12% currently.

“Our main contention over the past 6m has been that the US economy will look less exceptional as consumer spending cools and policy uncertainty prevents producers’ animal spirits from translating into actual capex,” strategists wrote.

The impact of slower spending expectations is already starting to have an impact on the market. Earlier this month, shares of airlines and retailers, like Kohl’s, Dick’s Sporting Goods, and Delta Airlines, tumbled on growing fears of a consumer slowdown.

Consumer discretionary stocks in the S&P 500 are down 9% from the start of the year, compared to the overall benchmark index, which is down by about 2% year-to-date.

“The S&P 500 basket of stocks for consumer discretionary companies has declined significantly in recent weeks, suggesting that investors are starting to worry about future consumer spending on big-ticket items such as cars, washing machines, and mobile phones,” Torsten Sløk, chief economist at Apollo Global Management, wrote last week.

Companies have also signaled that the outlook isn’t getting any better. Economist David Rosenberg wrote in a note last week that 70% of companies that reported earnings for the first quarter had a negative outlook due to uncertainty surrounding trade policy and tariffs.

“US equity futures are flashing red as corporate guidances continues to deteriorate,” Rosenberg wrote.