The stock market is poised for volatility as it prepares to open tomorrow amid the announcement that President Joe Biden will not seek reelection. This shift is expected to heighten economic uncertainty, with Democrats now rallying around a new candidate, likely Vice President Kamala Harris, who has been endorsed by Biden.
Josh Thompson, CEO of Impact Health USA, shared insights with Yahoo Finance, stating that if Biden confirms his withdrawal from the race, markets would likely experience immediate volatility and uncertainty. Investors typically favor stability, and such a major political change could disrupt that.
In response to this uncertainty, investors may gravitate toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheaval.
Additionally, there may be a pause in the so-called “Trump Trade,” a market response to the prospect of a second Trump administration. This trend has gained traction since former President Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt. The “Trump Trade” reflects investor behavior and preferences that favor sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Analyst Ed Mills from Raymond James noted that while Biden’s exit could lead to a reassessment of the race, it would not drastically change the overall electoral odds, currently estimated at 60% for Trump versus 40% for either Biden or a Democratic nominee. He added that while the “Trump trade” might stall, it is not anticipated to have a widespread impact on the market overall.