The stock market is set to open tomorrow amid heightened volatility following the announcement that President Joe Biden will not seek reelection. This news brings economic uncertainty to the forefront, as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris.
Josh Thompson, CEO of Impact Health USA, shared insights on the potential market impact, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty could lead investors to seek safety in assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the market may experience a slowdown in the so-called “Trump Trade.” This refers to trading patterns responding to the prospect of another Trump presidency, particularly after Trump outperformed Biden in a debate and survived an assassination attempt. While Trump has been seen as favorable to business interests during his presidency, potential beneficiaries of a second Trump term include sectors like healthcare, banking, cryptocurrency, and oil, alongside companies such as Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while uncertainty could momentarily stall the “Trump Trade,” his firm would maintain its existing electoral odds at 60% for Trump and 40% for either Biden or another Democrat. Mills suggested that the market would reassess the race but does not anticipate a broader market reaction.