The stock market is set to open tomorrow amidst the news that President Joe Biden will not seek reelection, leading to anticipated volatility.
Nvidia has been experiencing one of its most turbulent weeks on record. This decision by Biden raises economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market impact of Biden’s withdrawal, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty might drive investors towards safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Additionally, there is a possibility that the momentum of the “Trump Trade” could stall. This trade refers to market behaviors linked to the possibility of a second Trump administration, which has gained traction since the former president outperformed Biden in debates and survived an assassination attempt.
Historically, Trump has been seen as pro-business; hence sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group are expected to benefit from his potential return to power.
Ed Mills, a Washington policy analyst at Raymond James, noted in a recent report shared with CNBC, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”
Will Gavin contributed to this article.