The stock market is expected to experience significant volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This decision introduces a new wave of economic uncertainty, particularly as Democratic supporters rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, commented that Biden’s withdrawal could lead to immediate market fluctuations, as investors typically favor stability and predictability. The potential political shift could drive investors towards safer assets, such as gold, silver, and the Swiss franc, which are generally more stable amid political and economic turmoil.
Additionally, the market might see a slowdown in what is known as the “Trump Trade.” This term refers to the investor activity driven by the prospects of a second Trump administration, particularly after the former president’s strong debate performance against Biden and his recent survival of an assassination attempt. Historically, Trump has been perceived as business-friendly during his presidency, benefiting various sectors including healthcare, banking, cryptocurrency, oil stocks, and companies such as Tesla and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, mentioned that while a potential Biden exit could cause a pause in the “Trump Trade” as the market reassesses electoral dynamics, it may not lead to a significant overall market reaction. Currently, the odds remain at 60% for Trump to secure the nomination versus 40% for Biden or another Democratic candidate.