The stock market is expected to open tomorrow amid speculation that President Joe Biden will not seek reelection, leading to anticipated volatility.
The potential announcement brings economic uncertainty to the forefront as Democrats rush to endorse a new candidate, with Biden likely supporting Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden withdraws from the race, the market’s initial reaction will likely be one of volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he said.
This uncertainty could drive investors toward safer assets, such as gold, silver, and the Swiss franc, which are typically less affected by political and economic turmoil.
Additionally, there may be a slowdown in the so-called “Trump Trade,” which has gained traction since Donald Trump outperformed Biden in debates and survived an assassination attempt. This term describes how investors respond to the possibility of a second Trump presidency, as he has previously been supportive of business interests. Sectors likely to benefit from another Trump administration include healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated that while Biden’s exit would not immediately change electoral odds (currently at 60% for Trump versus 40% for Democrats), it could stall the current “Trump trade” as the market reevaluates the race. However, Mills does not foresee a wider market reaction.