May 14, 2026
While the war in Iran has driven gas prices way up, it looks like it might be driving retail stocks way down.
"Lots of consumer stocks are indeed falling apart, even if they shouldn't be," says Jim Cramer, the host of CNBC's Mad Money (1).
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When consumers are facing high inflation or a struggling economy, it's natural for stock prices to dip. But some industry stocks — including fast food, discount retailers and grocery stores — generally hold their value during a downturn.
This time, they aren't.
As Cramer reports, some stocks that are generally expected to perform well during periods of high inflation are being "absolutely slaughtered" right now. Here's what's going wrong, and why it's not necessarily a good idea to snap these stocks up in response.
Why trade down stocks aren't performing the way they should
During a recession, consumers are often unable to make all of the discretionary purchases they used to. This means that discretionary consumer industries see worse stock prices when times are tough.
But some companies benefit when consumers are forced to trade down to less expensive necessities. Discount stores like Dollar General [NYSE:DG] tend to perform better during high inflation as consumers pivot there to save cash. Fast food companies like McDonald’s [NYSE:MCD] and inexpensive grocery stores like Walmart also tend to perform well for the same reason.
Some of these companies are starting to see growth past previous predictions, indicating that consumers are struggling with high gas prices and are worried about the economy. For example, Dollar General's Q4 2025 report saw net sales go up by over 5% (2). McDonald's also performed better than expected in Q1 2026, with a 9.44% revenue growth (3).
But these companies' stock prices aren't reflecting their fiscal success. Dollar General stock is down 11% over the past month (4), while McDonald's stock is down 10% during the same time period (5).
Cramer says this is likely due to investors ditching consumer stocks as a whole thanks to emotionally driven investing decisions in response to the Iran war, decisions that Cramer believes are a bad call.
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"Investing based on the president's statements about Iran has been a big, big loser."
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Don't go out and buy retail stocks just yet
At the same time, you don't necessarily want to go out and buy stock in Dollar General or McDonald's just because people are dumping them.
"Buying retail because the wrong stocks have gotten cheap? No, it hasn't worked either," says Cramer.
Investment decisions that are based on current events are often more emotional than logical, and these decisions can get you stuck in the same buying/selling cycle that other investors are dealing with.
Instead, you might want to focus on your personal long-term goals and build a portfolio based on that. Sticking to a long-term strategy has a good chance of paying off more than trying to play the market based on the news, and you'll likely deal with less stress than you would otherwise.
"All I can say is, stick with what's working," says Cramer.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
CNBC (1); TheStreet (2); AOL (3); Yahoo Finance (4),(5).
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Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
