The stock market is set to react strongly tomorrow following the news that President Joe Biden has decided not to seek reelection, which is likely to introduce significant volatility.
A recent study indicated that California’s new $20 minimum wage for fast food workers has not resulted in job losses, highlighting the potential economic implications of Biden’s departure from the race. This announcement adds to the economic uncertainty as Democrats rally to support an alternative candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market response, stating that if Biden were to announce his withdrawal, investors would likely react with volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
Such uncertainty may lead investors to seek safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political turbulence.
Additionally, there could be a slowdown in what has been referred to as the “Trump Trade,” which has gained traction following Donald Trump’s strong performance in debates and recent events surrounding his campaign. This trade reflects how the market responds to the potential for a second Trump administration, which is expected to favor sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills pointed out that while Biden’s exit could lead to a reassessment of the electoral landscape, they would not immediately alter their odds, maintaining a 60% likelihood for Trump and 40% for a Democrat candidate. Mills indicated that while the “Trump trade” might stall, a broader market reaction is not anticipated.