The stock market is set to react to the announcement that President Joe Biden will not seek reelection, which is expected to introduce significant volatility. This decision is likely to raise economic uncertainties as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as his replacement.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that if Biden officially withdraws, the market is likely to experience immediate fluctuations. Investors typically favor stability, and such a drastic political change could disrupt that.
In response to this uncertainty, investors may turn to safer assets, including gold, silver, and the Swiss franc, which tend to perform better during times of political and economic instability.
Additionally, there may be a slowdown in what is known as the “Trump Trade,” a trend that has gained momentum since former President Donald Trump outperformed Biden in recent debates and survived an assassination attempt. This term describes the market behavior and investment patterns linked to expectations of a Trump re-election.
Analysts suggest that a second Trump presidency could benefit various sectors, including healthcare, banking, cryptocurrency, oil stocks, as well as Tesla and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted that even if Biden exits the race, they do not anticipate an immediate change in electoral odds, which currently stand at 60% in favor of Trump against 40% for Biden or another Democratic candidate. Mills indicated that while the market may reassess the situation, a broader market reaction is not expected.