The stock market is set to experience significant fluctuations tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to heighten economic uncertainty as the Democratic Party shifts its support toward a new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
Josh Thompson, CEO of Impact Health USA, expressed concerns about the potential for market volatility. He noted that, “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.”
As investors grapple with this uncertainty, there might be a move towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheaval.
Additionally, there may be a pause in the so-called “Trump Trade,” a term used to describe market behavior influenced by the former president’s potential return to power. This trend has gained momentum in light of Trump’s strong debate performances against Biden and his recent survival of an assassination attempt. The Trump Trade suggests that investors anticipate gains in various sectors, including healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, shared insights that while Biden’s departure could lead to a reevaluation of the current political landscape, he does not foresee a drastic market reaction. Mills indicated that the electoral odds would remain stable at 60% for Trump compared to 40% for Biden or other Democrats. He noted that there could be a slowdown in the recent momentum of the Trump Trade as the market reassesses the situation.