The stock market is set to experience significant swings when it opens tomorrow, following news that President Joe Biden will not seek reelection. This development is expected to create a wave of volatility.
Trump Media’s stock has been on a noticeable downward trend. Biden’s decision introduces a layer of economic uncertainty as Democrats quickly rally behind a new candidate, with Biden backing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, stated over the weekend, “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.”
In light of this uncertainty, investors may lean towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instabilities.
Additionally, this could lead to a slowdown in the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt.
The “Trump Trade” reflects the market’s reactions and investor behaviors linked to the prospect of a second Trump administration. Trump, a former real estate executive with a history of business pursuits, had a pro-business approach during his presidency. Sectors that might benefit from a second Trump term include healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Raymond James policy analyst Ed Mills noted last week, “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.”