The stock market is set to react tomorrow to President Joe Biden’s announcement that he will not seek reelection, a move that is expected to lead to significant volatility.
As Biden’s decision casts a spotlight on economic uncertainty, the Democratic Party is anticipated to quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented on the situation, saying, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty may lead investors to seek safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, there might be a slowdown in what is known as the “Trump Trade,” a market trend that has gained momentum since former President Donald Trump outperformed Biden during a recent debate and survived an assassination attempt. The Trump Trade reflects investor reactions and trading patterns based on the prospect of a second Trump administration. Trump, known for his business-friendly policies during his presidency, could positively impact sectors like healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla, as well as Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while a Biden exit from the race could lead to a reassessment of electoral odds (currently at 60% for Trump and 40% for Biden/Dem), the overall market reaction may not be as drastic as one might expect.