The stock market is set to react tomorrow amid news that President Joe Biden has decided not to seek reelection, which is expected to generate significant volatility.
In a related development, Microsoft is pointing fingers at Delta for a recent global IT outage that disrupted services worldwide.
Biden’s announcement brings economic uncertainty to the forefront as the Democratic Party scrambles to rally behind a new candidate, with Vice President Kamala Harris being the frontrunner for the nomination.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” stated Josh Thompson, CEO of Impact Health USA, in comments to Yahoo Finance over the weekend. Investors generally favor stability, making such a political shift potentially disruptive.
This uncertainty may drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less influenced by political and economic fluctuations.
Additionally, there is a chance that the “Trump Trade,” which has gained traction since the former president’s successful debate performance against Biden and his recent survival of an assassination attempt, could stall. The term “Trump Trade” describes how market behaviors and investment strategies shift in anticipation of a potential second Trump administration. During his presidency, Trump favored business-friendly policies, making stocks in sectors such as healthcare, banking, cryptocurrency, oil, and businesses like Tesla, as well as Trump Media and Technology Group, likely beneficiaries of another Trump term.
“Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We may see a slowdown in the recent ‘Trump trade’ as the market reevaluates the race, but we do not anticipate a broader market reaction,” said Ed Mills, a policy analyst at Raymond James, in a note circulated to CNBC last week.