President Joe Biden’s decision not to seek reelection is expected to create significant volatility in the stock market when it opens tomorrow. This announcement comes as Democrats begin to rally behind a potential new candidate, with Biden endorsing Vice President Kamala Harris as the frontrunner.
Josh Thompson, CEO of Impact Health USA, highlighted that if Biden officially withdraws, market reactions could be immediate and unpredictable. Investors typically prefer stability, and such a major political shift is likely to disrupt confidence in the market.
In response to this uncertainty, investors may turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic upheaval.
There is also speculation about the potential impact on what’s known as the “Trump Trade.” This term refers to market behaviors associated with expectations for a second Trump administration. Following the former president’s strong debate performance against Biden and a recent assassination attempt, the Trump Trade has gained traction. Sectors that could benefit from a second Trump presidency include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Despite these developments, Raymond James Washington policy analyst Ed Mills indicated that the firm’s electoral odds would not change significantly—remaining at 60% for Trump and 40% for Biden or another Democratic candidate—and suggested that while the Trump Trade might stall temporarily, a broader market impact is not anticipated.