The stock market is poised for a shift tomorrow following news that President Joe Biden has decided not to seek reelection, creating an environment likely marked by volatility.
A recent study indicates that California’s new $20 minimum wage for fast food workers has not led to job losses, a finding that adds complexity to the economic landscape.
Biden’s withdrawal will bring economic uncertainty to the forefront as the Democratic Party rallies behind a potential new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
“If President Biden were to announce his exit from the race, we would expect immediate market volatility and uncertainty,” stated Josh Thompson, CEO of Impact Health USA, during a recent interview with Yahoo Finance. “Investors typically favor stability and predictability, and such a significant political change would likely disrupt both.”
This level of uncertainty could lead investors to consider “safe-haven” assets, such as gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic turmoil.
Another potential outcome could be a pause in the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt.
The “Trump Trade” encapsulates the market’s reactions to the prospect of another Trump administration. As a former real estate mogul, Trump was known for his favorable policies toward business during his presidency. Stocks in sectors like healthcare, banking, cryptocurrency, and oil, along with companies such as Tesla and Trump Media and Technology Group, are expected to be significant beneficiaries of a second Trump term.
“Should Biden exit the race, we would not promptly alter our electoral odds (60% Trump versus 40% Biden/Dem). While the market might stall in its recent ‘Trump trade,’ we do not anticipate a broad market reaction,” commented Ed Mills, a policy analyst at Raymond James, in a note to CNBC last week.