3 Stocks to Watch as Wall Street Wealth Fuels Consumer Spending

Key Points

• U.S. households are increasingly tapping investment account withdrawals to fund spending, with such withdrawals nearly doubling as a share of total spending since 2019.
• Visa shows strong growth in card payments volume and revenue, though rising credit card delinquencies pose a potential risk to its business model.
• American Express and Costco both present favorable analyst outlooks, supported by strong credit quality and steady, membership-driven consumer spending, respectively.

According to the Federal Reserve, U.S. households' stock market holdings make up nearly one-third of total household assets as of the first quarter of 2026. That's an all-time high and roughly double their share at the start of the 2010s.

This partly explains the stability of consumer spending despite sticky inflation and higher interest rates. It has to do with the wealth effect.

The wealth effect refers to the idea that consumers will spend more when they feel more financially secure. That wealth is measured in the value of their homes and their investment portfolios.

However, many consumers may be using that "wealth" to fund their spending. Data from JPMorgan Chase NYSE: JPM shows that withdrawals from investment accounts as a share of total spending almost doubled from 3.5% in April 2019 to 6.8% by April 2026.

Those withdrawals are funding about 7% of U.S. household spending. That's potentially a bearish signal, particularly since many of these consumers are considered higher income, but it's likely to be bullish for several stocks.

Visa Profits From Rising Card Spending Without Taking Credit Risk

Visa NYSE: V is an obvious choice for investors looking to capitalize on stable consumer spending. There's ample data that supports the idea that consumers are using credit cards for an increasing percentage of their day-to-day purchases. As more spending moves onto cards, Visa collects fees on the dollar volume and number of transactions that run across its network, without lending any money itself.

Proof of that spending was on display in Visa's Q3 2026 earnings report. The company reported a 14% increase in net revenue to $11.6 billion. Payments volume and processed transactions both grew 10%, with payments volume surpassing $4 trillion for the first time.

The stock is up about 12% in 2026 and moved to a new 52-week high after what now looks like some profit-taking that began in August. Visa carries a consensus Buy rating and an average price target of $426.12, with several analysts continuing to raise their price targets.

One concern could be the state of consumer credit. Visa doesn’t carry credit risk; the banks that issue its cards do. But that doesn’t make it immune to a credit cycle.

According to the New York Fed, 12.9% of credit card balances were 90 or more days delinquent in Q2 2026, close to the Great Recession record. Banks are already tightening underwriting and slowing credit-limit growth. If defaults accelerate, issuers will pull back further, and that would show up in Visa’s payments volume.

For now, bank charge-offs remain near pre-pandemic norms. There’s not much evidence of a spending slowdown yet, but bad news like that tends to be a “gradually, then suddenly” event.

AXP Looks Undervalued as Credit Quality Stays Strong

American Express NYSE: AXP tells a similar story to Visa, but with less overhang from credit risk. American Express caters to higher-income consumers with higher credit scores.

That credit quality was evident in the company's Q2 2026 earnings report. The company reported that delinquency and write-off rates are still below 2019 levels.

It also reported that its provision expense benefited from a $191 million reserve release due to portfolio strength.

AXP is down more than 16% in 2026. However, it's offering the opportunity for double-digit earnings growth while trading at an attractive 17x forward earnings.

American Express carries a consensus Moderate Buy rating and an average price target of $365.63, suggesting upside of more than 17% from recent levels.

Costco Membership Model Delivers Steady Consumer Spending

Costco Wholesale Corp. NASDAQ: COST addresses the where, and not the how, of consumer spending. The company just reported strong September sales, although some data suggests that more of that revenue is coming from gasoline purchases.

It doesn't change the buying case for Costco. The company's membership model, which comes with high retention, ensures a steady stream of consumers.

Costco continues to deliver year-over-year revenue and earnings growth even as investors might expect tougher comparisons. Costco also continues to expand its national footprint.

Investors may balk at the stock price. COST trades at nearly $1,000 per share, which can be prohibitive for investors who prefer to own whole shares. However, even at over 43x forward earnings, the stock is a value compared to itself.

Costco carries a consensus Moderate Buy rating, with an average price target of $1,081.79, suggesting roughly 10% upside from recent levels.