Americans who have propped up consumer spending are the most likely to feel the sting from the recent bout of market losses. Some are already making plans to cut back.

It’s never been easier for everyday Americans to trade stocks. And, for the past two years, that’s largely meant one thing: making money.

On platforms from Fidelity to Robinhood to Coinbase, almost everything seemed to come up green in 2023 and 2024. The S&P 500 gained more than 20% in both years and favorites of retail investors, like Nvidia Corp. (+819%), Tesla Inc. (+228%) and Bitcoin (+467%), surged along with any number of ultra-leveraged funds.

But the recent US stock plunge, coming as President Donald Trump’s chaotic trade war rattles investors and corporate America’s C-suites, has shattered the notion that stocks only go up. The S&P 500 rebounded slightly Wednesday after nearly entering a correction a day earlier, closing down 9.3% from an all-time high of 6,144 on Feb. 19.

The question is especially pressing given it’s high-income Americans — those who own stocks but aren’t entirely immune to a market swoon — who have been powering consumer spending in recent years.

‘Deer in the Headlights’

At SGH Wealth Management, founder Sam Huszczo said he is “just starting to get the first wave of people getting concerned”. He said he met a woman earlier this week who has put more than half of her portfolio in Nvidia stock.

“She’s like a deer in the headlights,” Mr Huszczo said.

In the post-pandemic economy, spending by middle- and high-income households has fueled the strong demand for retail goods and propped up consumer resilience, according to an October report from the Fed. Meanwhile, lower-income households pulled back on spending from mid-2021 to mid-2023, especially after the extra savings they built up during the initial shutdown were depleted.