The stock market is set to experience volatility tomorrow following the announcement that President Joe Biden will not pursue reelection, bringing economic uncertainty to the forefront as the Democratic Party seeks a new candidate. Biden has endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, indicated that Biden’s withdrawal would likely lead to significant market fluctuations. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
This uncertainty could lead investors to seek refuge in safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there may be a slowdown in the “Trump Trade,” which has gained traction after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” describes how investor behavior shifts in anticipation of a possible second Trump administration, which was marked by favorable conditions for business interests. Sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group could see significant benefits if he were to return to power.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit from the race could stall momentum for the “Trump Trade,” he does not foresee a broader market reaction at this stage, maintaining electoral odds at 60% for Trump versus 40% for Biden or another Democrat.