The stock market is set to open tomorrow under the backdrop of President Joe Biden’s unexpected decision not to seek reelection, which is likely to trigger significant volatility.
Nvidia’s stock is experiencing one of its most turbulent periods this week, amid the uncertainties surrounding Biden’s announcements.
This development is expected to bring economic uncertainty to the forefront, as Democrats work to rally behind a new candidate, with Biden officially endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, commented on the situation, stating that if President Biden were to withdraw from the race, the immediate market response would likely include volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he articulated.
This atmosphere of uncertainty might lead investors to seek refuge in safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there could be a slowdown of the “Trump Trade,” a trend that has gained traction since former President Donald Trump exceeded expectations during his recent debate with Biden and survived an attempted assassination. The term “Trump Trade” describes investor behavior in anticipation of a potential second term for Trump, who was known for being business-friendly during his presidency. Sectors like healthcare, banking, cryptocurrency, and oil, along with companies such as Tesla and Trump Media and Technology Group, are expected to benefit if Trump wins again.
Raymond James Washington policy analyst Ed Mills indicated that while they would not immediately adjust their electoral odds (currently at 60% for Trump versus 40% for Biden or his Democratic successor), a withdrawal of Biden could stall the previously rising “Trump trade” as the market reevaluates the political landscape, although a broader market reaction is not anticipated.