The stock market is set to experience changes tomorrow following the announcement that President Joe Biden will not seek reelection, likely leading to increased volatility.
The decision is expected to heighten economic uncertainty as Democrats work to rally behind a potential new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market reaction, stating, “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.”
In light of this uncertainty, investors may turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheaval.
Moreover, there could be a slowdown in the “Trump Trade,” which gained traction after former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. This term refers to the market’s behavior following the expectation of another Trump administration. Trump’s presidency was characterized by favorable policies for business interests, and certain sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group could benefit again if he returns to power.
Ed Mills, a policy analyst at Raymond James, noted that even if Biden exits the race, they do not foresee an immediate change in electoral odds, which currently stand at 60% for Trump versus 40% for Biden or another Democrat. He added that while the recent momentum of the “Trump trade” may stall as the market reassesses the political landscape, a broader market reaction is not anticipated.