Tomorrow, the stock market will react to news that President Joe Biden will not seek reelection, leading to expected volatility.
This announcement introduces significant economic uncertainty as Democrats rush to support a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, indicated that the market would likely experience immediate volatility and uncertainty following Biden’s withdrawal. He noted, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors might gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient amid political and economic turmoil.
There is also the potential for a slowdown in the so-called “Trump Trade,” which has gained traction since Donald Trump, the former president and current Republican candidate, outperformed Biden in debates and survived an assassination attempt. The Trump Trade describes market trends influenced by the possibility of another Trump presidency, particularly favoring sectors like healthcare, banking, cryptocurrency, oil stocks, and companies such as Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, mentioned that while Biden’s departure from the race may prompt investors to reassess the competition, they do not anticipate a drastic shift in electoral odds, currently standing at 60% for Trump versus 40% for Biden or another Democrat. He added that the market might experience a pause in the recent “Trump trade” as it evaluates the race further, but did not foresee a broader market impact.