Tomorrow’s stock market opens amidst the significant announcement that President Joe Biden will not seek reelection, likely resulting in increased volatility.
This decision introduces economic uncertainty as Democrats swiftly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden confirms his withdrawal from the race, the market is expected to react with volatility and uncertainty. Investors typically favor stability, and such a notable political change could disrupt that stability.
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, this development could lead to a slowdown in what is termed the “Trump Trade.” This refers to market behaviors and investor strategies influenced by the prospect of a second Trump administration. Since outperforming Biden in a debate and surviving an assassination attempt, Trump has seen a resurgence in market favor. His presidency was characterized by pro-business policies, benefiting sectors including healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, remarked in a note to CNBC that while they wouldn’t alter their electoral odds significantly (60% for Trump versus 40% for Biden or another Democrat), a withdrawal from the race by Biden could stall the current “Trump trade” as the market reevaluates the political landscape, though he does not anticipate a broader market shift.