The stock market is set to face potential volatility when it opens tomorrow following the announcement that President Joe Biden will not seek reelection. Boeing is looking to raise $19 billion amid ongoing delivery delays and worker stoppages.
This decision introduces a level of economic uncertainty as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, stated that if Biden confirms his withdrawal from the race, the market’s initial reaction is likely to be unstable. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
This uncertainty could lead investors to gravitate towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Another potential outcome is a slowdown in the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a debate and endured an assassination attempt. This term describes how market behaviors shift in anticipation of a Trump reelection.
Historically, Trump has been viewed favorably by business interests during his presidency, with certain sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group expected to benefit from a prospective second term.
Ed Mills, a policy analyst at Raymond James, mentioned in a note to CNBC last week that while they wouldn’t immediately adjust their electoral odds, there could be a pause in the recent Trump trade as the market reevaluates the political landscape but doesn’t foresee widespread market disruption.