Friday wasn’t a great day on Wall Street, but maybe not too surprising, since it’s a retreat from Thursday’s all-time highs. Three major indexes closed at record peaks: the Dow, S&P 500 and the Russell 2000, which tracks small- and mid-sized companies. For the S&P, it was record-high number 37 this year. 

Now, the stock market isn’t the economy, but it’s not nothing, either. It tells us a lot about what investors — and the companies they invest in — are anticipating, how they think the economy and corporate earnings will do, in the next six months or so. And it builds wealth, at least for some, which supports economic growth. 

“Today is more of a digestion day,” said Sam Stovall, chief investment strategist at CFRA Research. “So far, only consumer staples and health care are in the green. You know the old saying that ‘When the going gets tough, the tough go eating, smoking and drinking, and if they overdo it, they have to go to the doctor.’ Those are your traditional safe havens.”

The rally that led to Thursday’s record highs, though, was much broader. Even as investors have pulled back a bit from high-flying AI-related stocks, they’ve plowed into others, said Gary Schlossberg at the Wells Fargo Investment Institute.

“We’re starting to see a rotation into other sectors of the market. We’re favorable on financials, industrials,” he said.

Meanwhile, the AI boom is boosting companies involved in the AI build-out.

“A lot of industrial companies and energy companies, second and third derivative beneficiaries of AI investment,” said Jed Ellerbroek at Argent Capital Management.

Taken all together, “This is a strong, balanced stock market rally,” Ellerbroek said.

And maybe that’s a little bit surprising, given all the economic uncertainty, the policy uncertainty on tariffs and interest rates and all the rest this year. 

But remember, “The stock market anticipates the economy by about six-or-so months. Economic growth in 2026 will likely increase, and that will filter down into retail sales, consumer confidence, etcetera,” said Stovall.

All the extra wealth from stock gains and tax refunds will juice the consumer economy, said John Leer at polling firm Morning Consult, though not for all consumers.

“Stock market growth has been a really strong driver of consumer sentiment for high-income consumers, and it’s one of the reasons that we’re experiencing this K-shaped economy right now, this divergence,” he said.

The divergence is between higher-income who have stocks and lower-income consumers who don’t, and whose jobs and wages are increasingly at risk. Leer said stock gains make people who own stock feel richer and spend more — that’s the so-called “wealth effect.”

But there’s a risk in this economic reliance on high-income-earners. If the stock market tanks, they could stop spending.