The stock market is set to react tomorrow to the announcement that President Joe Biden will not seek reelection, leading to expected volatility.
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Biden’s decision is likely to bring economic uncertainties to the forefront as the Democratic Party scrambles to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, indicated that Biden’s withdrawal would likely spark immediate market volatility. “Investors generally prefer stability and predictability, and such a significant political change would disrupt both,” he stated.
This uncertainty may lead investors to turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less influenced by political and economic instability.
Additionally, there could be a slowdown in 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 how market behaviors shift in response to the potential for a second Trump administration, known for its favorable stance towards business interests. Sectors that may benefit from another Trump presidency include healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
Despite these developments, Raymond James Washington policy analyst Ed Mills stated that if Biden exits the race, they would not immediately adjust their electoral odds of 60% in favor of Trump versus 40% for Biden or a Democrat. Mills noted that while the recent “Trump Trade” may stall as the market reassesses the race, he does not foresee a broader market reaction.