The stock market is set to react tomorrow to President Joe Biden’s announcement that he will not seek reelection, which is likely to result in increased volatility.
Nvidia shares are currently experiencing one of the most unstable weeks in recent memory, leading investors to pay close attention to the market’s movements.
This decision introduces economic uncertainty as Democrats quickly shift their support to a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, stated, “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 might lead investors to gravitate toward safer assets, such as gold, silver, and the Swiss franc, which are typically less responsive to political and economic upheavals.
Additionally, the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in debates and survived an assassination attempt, could also face challenges. This trade reflects how investors react to the possibility of a return to Trump’s administration, which is viewed as favorable to business interests. Industries that may benefit from a second Trump term include healthcare, banking, cryptocurrencies, oil stocks, and Tesla, along with Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills commented, “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 foresee a broader market reaction.”