The stock market is set to react tomorrow to the news that President Joe Biden will not seek reelection, which is expected to lead to significant volatility.
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This political decision may create economic uncertainty as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to withdraw from the race, the market would likely respond with unpredictability. He stated, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty might lead investors to flock to safe-haven assets, including gold, silver, and the Swiss franc, which tend to be less influenced by political and economic turbulence.
Additionally, there is speculation that the so-called “Trump Trade,” which has gained traction since Donald Trump, the former president and current Republican candidate, outperformed Biden in debates and survived an assassination attempt, may experience a slowdown. This trade refers to market dynamics influenced by the prospect of another Trump administration, which previously favored business interests. Sectors expected to benefit from a possible second Trump term include healthcare, banking, cryptocurrency, and oil stocks, along with Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, indicated that while a potential Biden exit could stall recent “Trump trade” momentum as the market reassesses the race, they do not foresee a drastic market reaction.