The stock market is set to open tomorrow amidst the announcement that President Joe Biden will not seek reelection, a development likely to bring significant volatility.
This decision adds a layer of economic uncertainty as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, indicated over the weekend that if Biden were to withdraw from the race, the market would likely experience immediate volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted in comments to Yahoo Finance.
This uncertainty may drive investors towards safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the market may see a pause in the so-called “Trump Trade,” which has gained traction following former President Donald Trump’s strong debate performances and his survival of an assassination attempt.
The “Trump Trade” describes market behaviors influenced by the prospect of a second Trump administration. During his presidency, Trump, a former real estate businessman, was known for promoting business-friendly policies. Sectors that could benefit in the event of a second Trump presidency include healthcare, banking, cryptocurrency, oil, as well as companies like Tesla and Trump’s Media and Technology Group.
According to Ed Mills, a policy analyst at Raymond James, while a change in Biden’s candidacy might lead to a reassessment of market dynamics, it would not significantly alter the electoral odds, with predictions remaining at 60% for Trump and 40% for Biden or another Democratic candidate.