The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, which is likely to introduce significant volatility.
In a noteworthy development, Mars, the maker of M&M candies, is acquiring Kellanova, the producer of Pop-Tarts, marking one of the largest business transactions of the year.
Biden’s potential withdrawal from the race could heighten economic uncertainty as Democrats quickly rally around a new candidate, with Vice President Kamala Harris endorsed by Biden as a potential nominee.
Josh Thompson, CEO of Impact Health USA, indicated that an announcement of Biden stepping down could lead to market instability. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained, hinting that this uncertainty may drive investors toward safer assets such as gold, silver, and the Swiss franc.
There may also be a pause in what is termed the “Trump Trade,” referring to the market dynamics that have evolved following Donald Trump’s strong debate performances and recent events surrounding him. The Trump Trade encapsulates how investors react in anticipation of a possible second Trump administration, given Trump’s business-friendly policies during his presidency. Specific sectors likely to benefit from a second term include healthcare, banking, cryptocurrency, oil stocks, and 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,” noted Ed Mills, a policy analyst at Raymond James, in a recent communication shared with CNBC.
The political landscape’s evolving nature continues to capture the attention of investors as they navigate these developments.