The stock market is set to face potential volatility following the announcement that President Joe Biden will not pursue reelection. This decision is likely to heighten economic uncertainty as Democrats begin to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, commented that the market is expected to react with volatility and uncertainty. He stated that investors typically favor stability and predictability, and such a significant political shift could disrupt these preferences.
In light of this uncertainty, investors may lean towards safer assets such as gold, silver, and the Swiss franc, which are generally less affected by political and economic turmoil.
Additionally, the “Trump Trade,” which has gained traction as former President Donald Trump outperformed Biden in debates and survived an assassination attempt, might experience a slowdown. This term refers to investor behavior in anticipation of a potential second Trump administration. During his presidency, Trump was perceived as supportive of business interests, benefiting sectors like healthcare, banking, cryptocurrency, oil stocks, and companies such as Tesla and Trump Media and Technology Group.
Analyst Ed Mills from Raymond James noted that while the electoral odds would remain at 60% for Trump and 40% for Biden or another Democrat, the market could reassess the race, impacting the recent momentum of the “Trump Trade” without triggering a broader market response.