The stock market is set to open tomorrow amidst the news that President Joe Biden will not be running for reelection, which is expected to introduce significant volatility.
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The president’s decision has sparked economic uncertainty as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” said Josh Thompson, CEO of Impact Health USA, in an interview with Yahoo Finance. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty could drive investors towards safe-haven assets like gold, silver, and the Swiss franc, which are less affected by political and economic instability.
There is also potential for the recent “Trump Trade” to stall. The term refers to market behaviors and investor actions in anticipation of a second Trump administration. Since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt, there has been increased market activity favoring his possible return to office. Sectors expected to benefit include healthcare, banks, cryptocurrency, and oil, along with companies like Tesla and Trump Media and Technology Group.
“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,” stated Raymond James Washington policy analyst Ed Mills in a note shared with CNBC.