The stock market is set to react to the news that President Joe Biden has decided not to seek reelection, leading to anticipated volatility in trading. This decision is expected to heighten economic uncertainty as Democrats quickly rally around a new candidate, with President Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, noted that if Biden officially announces his withdrawal, the market would likely respond with immediate volatility and uncertainty. Investors typically favor stability, and such a significant political change could disrupt this.
In response to this uncertainty, investors may pivot toward safe-haven assets such as gold, silver, and the Swiss franc, which are generally less affected by political and economic fluctuations.
Additionally, there may be a pause in what is known as the “Trump Trade,” which has gained traction following the former president’s strong debate performances against Biden and his recent survival of an assassination attempt. The Trump Trade encapsulates market behaviors in relation to the anticipated impact of another Trump administration. Notably, sectors that could benefit from a second Trump presidency include healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills mentioned that while Biden’s exit from the race wouldn’t immediately change electoral odds—currently assessed at 60% for Trump and 40% for a Biden/Democrat contender—there might be a slowdown in the recent Trump Trade as the market recalibrates its outlook on the race, though no broader market impact is expected.