The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to introduce significant economic uncertainty, especially as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, commented on the potential market impact, stating that, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty.” He noted that investors typically favor stability and predictability, which such a political shift could disrupt.
This newfound uncertainty may drive investors toward safe-haven assets, including gold, silver, and the Swiss franc, which tend to be more stable in times of political and economic unrest.
Additionally, the announcement may also impede the ongoing “Trump Trade.” This trend has gained momentum since former President Donald Trump, the Republican presidential nominee, showcased his debate skills against Biden and survived an assassination attempt. The “Trump Trade” reflects the market’s response to the perceived benefits of another Trump administration, particularly for sectors such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that the electoral odds would not change dramatically even with Biden’s exit. In a note shared with CNBC, Mills stated, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”