There is a new NBER paper on this topic by Alexander Wagner, Richard J. Zeckhauser, and Alexandre Ziegler, here is the abstract:
The election of Donald J. Trump as the 45th President of the United States of America on 11/8/2016 came as a surprise. Markets responded swiftly and decisively. This note investigates both the initial stock market reaction to the election, and the longer-term reaction through the end of 2016. We find that the individual stock price reactions to the election – that is, the market’s vote – reflect investor expectations on economic growth, taxes, and trade policy. Heavy industry and banking were relative winners, whereas healthcare, medical equipment, pharmaceuticals, textiles, and apparel were among the relative losers. High-beta stocks and companies with a hitherto high tax burden benefited from the election. Although internationally-oriented companies may profit under some plans of the new administration, several other arguments suggest a more favorable climate for domestically-oriented companies. Investors have found the domestic-favoring arguments to be stronger. While investors incorporated the expected consequences of the election for US growth and tax policy into prices relatively quickly, it took them more time to digest the consequences of shifts in trade policy on firms’ prospects.
Having read through the paper, this does not to me look mainly like a shift from consumers (domestically-oriented and retail stocks are doing well enough). It is closer to “companies overall benefit from greater wealth creation, though some will benefit considerably more than others, with some trade worries built in.” The tax component is significant.
Again, the market is often wrong, but this is at the very least a…um…”public relations problem” for the Democrats. The worse you think Trump is, the worse this problem becomes!
And please, don’t tell me on Twitter about the stock market not predicting your favorite catastrophe from history. That point would not pass through an Intro to Stats course intact.