The stock market is poised for a significant reaction tomorrow following the announcement that President Joe Biden will not seek reelection, likely resulting in increased volatility.
Nvidia’s stock is currently experiencing one of its most challenging weeks on record, which has drawn investor attention.
Biden’s decision will usher in economic uncertainty as Democrats rush to rally support behind a potential successor, with Biden endorsing Vice President Kamala Harris as the frontrunner.
Josh Thompson, CEO of Impact Health USA, noted 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.”
This potential uncertainty may lead investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Additionally, there could be a pause in what has been termed the “Trump Trade,” which has gained momentum since former President Donald Trump surpassed Biden in a debate and survived an assassination attempt.
The “Trump Trade” refers to market behaviors and trading patterns influenced by expectations surrounding a potential second Trump administration. Trump, known for his business-friendly policies during his presidency, is seen as advantageous for sectors such as healthcare, banking, cryptocurrency, and oil stocks, alongside companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills stated last week, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We might see a stall in the recent ‘Trump trade’ while the market reassesses the race, but we do not anticipate a broader market reaction.”