The stock market is set to experience significant volatility following the announcement that President Joe Biden will not seek reelection. This development raises economic uncertainty as Democrats prepare to rally around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented over the weekend that the market will likely respond with jitters if Biden officially withdraws from the race, as investors typically favor stability and predictability. Such a political shake-up could steer them towards safer investments like gold, silver, and the Swiss franc, which tend to be less influenced by political and economic upheavals.
Additionally, the potential end of the “Trump Trade,” which has gained momentum since former President Donald Trump, the Republican nominee, bested Biden in recent debates and survived a threat to his life, might be on the horizon. This trade encapsulates market trends driven by expectations surrounding a possible second Trump administration. Trump has been perceived as favorable to business during his presidency, benefitting sectors such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while Biden’s departure from the race could momentarily stall the “Trump trade” as the market evaluates its implications, a broader market upheaval is not anticipated.