The stock market is set to open tomorrow amid the significant news that President Joe Biden will not seek reelection, which is likely to lead to increased volatility.
Nvidia’s stock has experienced one of the most tumultuous weeks in its history, highlighting the turbulence in the market. With Biden’s announcement, economic uncertainty is expected to take center stage as Democrats scramble to rally behind a potential successor, with Vice President Kamala Harris being a leading candidate for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed his views on the potential market impact, stating that should Biden announce his withdrawal from the race, the immediate reaction could be marked by volatility and uncertainty. Investors typically favor stability, and such a drastic political shift would disrupt that preference.
This uncertain environment could drive investors towards safer assets like gold, silver, and the Swiss franc, which are generally less affected by political and economic upheaval.
Additionally, this situation may impact the so-called “Trump Trade,” a market trend that has gained momentum following the former president’s recent performance against Biden in debates and his survival of an assassination attempt.
The “Trump Trade” refers to market behavior influenced by expectations surrounding a potential second administration under Donald Trump. Known for his pro-business stance during his presidency, key sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group are among those anticipated to benefit from a Trump victory.
Ed Mills, a Washington policy analyst at Raymond James, commented that if Biden were to exit the race, they would not immediately alter their electoral odds, currently assessing it as a 60% chance for Trump versus 40% for Biden or another Democrat. He noted a possible stagnation in the momentum of the “Trump trade” as the market recalibrates its perspective on the election, although he does not foresee a drastic broader market reaction.