The stock market is set for a volatile opening as news emerges that President Joe Biden will not seek reelection. This decision brings economic uncertainty to the forefront as Democrats rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that should Biden announce his withdrawal from the race, the immediate market response would likely involve volatility and uncertainty. He noted that investors typically favor stability and predictability, which would be disrupted by such a significant political change.
This uncertainty may drive investors toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Another potential outcome could be the slowdown of the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The “Trump Trade” reflects investor trading behaviors in anticipation of a second Trump term, with healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group expected to benefit.
Raymond James Washington policy analyst Ed Mills indicated in a note to CNBC that while Biden’s exit from the race may cause a reassessment of the electoral odds—currently 60% in favor of Trump versus 40% for Biden or a Democratic candidate—the broader market reaction may remain stable.