The stock market is expected to experience volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development has raised concerns about economic uncertainty as Democrats work to rally support for a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden officially announced his exit from the race, it would likely trigger an unpredictable reaction in the market. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he remarked.
In response to this uncertainty, investors may turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt, may experience a slowdown. The Trump Trade reflects investor behavior linked to the prospects of Trump’s potential return to office, benefiting sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, mentioned that while Biden’s withdrawal could stall the recent Trump trade, he does not anticipate significant overall market changes. “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,” he stated in a note to CNBC.