The stock market is expected to see increased volatility as President Joe Biden’s decision not to run for reelection will be made public tomorrow. This announcement is likely to intensify economic uncertainty, especially as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, commented to Yahoo Finance over the weekend that a formal withdrawal by President Biden could trigger swift market fluctuations. He said, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to the anticipated uncertainty, investors may seek safety in assets known for their resilience amid political and economic instability, such as gold, silver, and the Swiss franc.
Additionally, the so-called “Trump Trade,” which has gained momentum since Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt, could also experience a slowdown. This term refers to market trends influenced by the potential for a second Trump administration, which is viewed as favorable for various sectors, including healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated in a note to CNBC that while Biden’s exit from the race might not necessitate immediate adjustments to electoral odds (currently at 60% for Trump to 40% for Biden/Democrats), a reassessment of the political landscape could stall the momentum of the “Trump trade.”