The stock market is expected to open tomorrow amidst reports that President Joe Biden will not seek reelection, leading to anticipated volatility.
Analysts suggest that GM’s recent earnings report could bode well for Tesla and the other companies in the so-called Magnificent Seven list.
This decision from Biden introduces a new layer of economic uncertainty, as Democratic leaders rush to support a new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, mentioned over the weekend that if President Biden were to officially withdraw from his reelection campaign, the market would likely experience immediate volatility and uncertainty. He noted that investors typically prefer environments characterized by stability and predictability, which may be disrupted by such a major political change.
This uncertainty may lead investors to gravitate towards safer assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, there may be a slowdown in the momentum of what has been termed the “Trump Trade.” This refers to investment patterns that arise in response to the prospect of a second Trump presidency. The Trump Trade gained traction following the former president’s strong performance in debates and his survival of an assassination attempt. Historically, Trump’s administration was seen as beneficial for certain sectors, including healthcare, banking, cryptocurrencies, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills stated that if Biden exited the race, the electoral odds would remain unchanged at 60% for Trump versus 40% for Biden or another Democratic candidate. He indicated a potential slowdown in the “Trump Trade” as the market reevaluates the electoral landscape, but he does not foresee a broad market reaction.