The stock market’s red-hot run going into the summer months confirms one reality: The gains are only going to make the rich richer and allow them to be the main economic driver through their spending power.

The insight: In a new piece of research, Goldman Sachs strategist Elsie Peng highlighted equity gains as the dominant driver of household wealth accumulation and the main contributor to a positive “wealth effect” on consumer spending. Peng estimated that wealth effects boosted annualized consumption growth by 0.3 percentage points on average over the past couple of years, with roughly 0.2 percentage points attributable to AI-related equity gains.

Looking ahead, Peng expects wealth effects to boost consumption by 0.4 percentage points over the next year, driven predominantly by recent outperformance in AI-related stocks such as Nvidia (NVDA) and Micron (MU).

Peng added that the top income quintile accounts for nearly all of the recent wealth effect on consumption growth,

About the market: What goes up has refused to come down. Just yesterday, the Dow Jones Industrial Average (^DJI) surged another 875 points to close at a fresh record of 51,562, led by massive gains in UnitedHealth (UNH), Goldman Sachs (GS), JPMorgan (JPM), and Johnson & Johnson (JNJ) as investors hunt beyond the tech space for value.

The rally, by and large, though, has been fueled by stronger-than-expected corporate earnings, massive spending on AI infrastructure, and growing confidence that the economy can keep expanding even as growth moderates. The result is one of the strongest stretches for Wall Street in years, with all three major indexes sitting near all-time highs and investors once again asking how much further this bull market can run.

The bottom line: Have you been wondering why earnings from Best Buy (BBY), Target (TGT), and Walmart (WMT) didn’t fall off a cliff in the first quarter in the face of surging gas prices? Then let the above chart from Goldman Sachs be your guide.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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