The stock market is poised for volatility with the news that President Joe Biden will not seek reelection. The announcement is likely to escalate economic uncertainty as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, mentioned that if Biden were to declare his withdrawal from the race, the market would likely experience immediate fluctuations. He noted that investors tend to favor stability and predictability, and such a significant political development could disrupt both.
This heightened uncertainty may lead investors to seek refuge in safe-haven assets, including gold, silver, and the Swiss franc, which are generally less susceptible to political and economic turmoil.
Another potential outcome could be a slowdown in the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt.
The “Trump Trade” encapsulates the market’s reactions and investor behaviors in anticipation of another Trump administration. Trump, who has had a tumultuous business career, was notably supportive of business during his presidency, leading to expectations that sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group could benefit under a second Trump term.
Ed Mills, a policy analyst at Raymond James, indicated that if Biden steps down, they would likely maintain their electoral odds at 60% for Trump versus 40% for a Democratic candidate. He suggested that while there may be a pause in the recent “Trump trade” as the market reassesses the political landscape, a broader market reaction is not anticipated.