The stock market is set to react to the news that President Joe Biden will not seek reelection, leading to expected volatility. This development will heighten economic uncertainty as Democrats work to rally support for a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, stated that Biden’s withdrawal would likely trigger an immediate response from the markets characterized by volatility and uncertainty. Investors typically favor stability, and such a notable political change would disrupt the current landscape.
This uncertainty might redirect investor focus towards safe-haven assets like gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic upheaval.
Another outcome could be a pause in the “Trump Trade,” which has been gaining momentum since former President Donald Trump outperformed Biden in debates and survived an assassination attempt. This term refers to market behaviors linked to the anticipation of a second Trump administration. Trump, a former real estate mogul, had a pro-business stance during his presidency, benefiting sectors such as healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group.
Despite the potential for a shift in market sentiment, Raymond James Washington policy analyst Ed Mills noted that they do not anticipate an immediate change in electoral odds (currently 60% Trump to 40% Biden/Dem), although the recent “Trump trade” may pause as the markets reevaluate the political landscape.