The stock market is poised for a turbulent session tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to create significant volatility as Democrats scramble to rally support behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, emphasized the likely market repercussions, stating that the announcement of Biden’s withdrawal would trigger a wave of uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which are typically less affected by political and economic fluctuations.
Additionally, the market may experience a slowdown in what is known as the “Trump Trade,” a trend that has gained traction since Donald Trump’s strong debate performance against Biden and his recent survival of an assassination attempt. The “Trump Trade” reflects how investors respond to the prospect of a potential second Trump administration, which is viewed favorably for various sectors, including healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted that while the market may reassess the political landscape in light of Biden’s withdrawal, there is no immediate need to alter their electoral odds, which currently stand at 60% for Trump versus 40% for Biden or another Democratic candidate.