The stock market is set to experience significant volatility tomorrow following the news that President Joe Biden has decided not to seek reelection. This development raises economic uncertainty as Democrats begin rallying around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, remarked that if Biden officially announces his exit from the race, the market is likely to react with volatility and uncertainty. Investors typically favor stability, and such a major political change could disrupt that expectation.
In response to this uncertainty, investors may move toward safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheaval.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has gained traction recently after former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade reflects how market behaviors change based on the potential for a second Trump administration. Trump, who previously served as president, supported business interests, and sectors like healthcare, banking, cryptocurrency, oil, as well as Tesla and Trump Media and Technology Group, are anticipated to benefit from another Trump presidency.
Ed Mills, a Washington policy analyst with Raymond James, indicated that while the electoral odds might not change immediately (current expectations stand at 60% for Trump and 40% for Biden or another Democrat), the market could reassess and possibly stall the momentum of the recent “Trump trade.” However, he does not foresee a broader market impact.