The stock market is set to experience significant volatility as President Joe Biden is expected to announce he will not seek reelection. With this development, economic uncertainty is likely to take center stage as Democrats work to rally support for a new candidate, with Biden backing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden confirms his withdrawal, the market’s immediate response will likely be marked by volatility and unease. Investors typically favor stability, and such a major political change could disrupt this preference.
The potential market fluctuations may lead investors to seek refuge in safe-haven assets such as gold, silver, and the Swiss franc, which tends to be less affected by political and economic instability.
Additionally, analysts suggest there might be a slowdown in what is known as the “Trump Trade,” which refers to market behavior in response to the prospect of a second Trump administration. This trend gained traction after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” reflects investor enthusiasm for sectors expected to benefit from a Trump presidency, including healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated that despite Biden’s potential exit from the race, they would not immediately alter their electoral odds, currently estimated at 60% for Trump and 40% for Biden or Democrats. Mills indicated that while the recent “Trump Trade” might stall as the market reassesses the election landscape, a broader market reaction is not anticipated.