The stock market is anticipated to experience significant volatility tomorrow following President Joe Biden’s announcement that he will not seek reelection. This news has prompted concerns about economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, stated that an announcement of Biden’s withdrawal would likely lead to unpredictable market reactions, as investors typically favor stability and predictability. The potential for political upheaval may drive investors toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by economic fluctuations.
In parallel, there may be a slowdown in the “Trump Trade,” which has gained traction after former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The “Trump Trade” refers to how the market reacts to the possibility of Trump’s return to office, with significant anticipated benefits for sectors including healthcare, banking, cryptocurrencies, and oil, as well as companies like Tesla and Trump Media and Technology Group.
Despite these developments, Raymond James Washington policy analyst Ed Mills commented that while a departure of Biden from the race might alter the political landscape, they do not foresee an immediate shift in electoral odds, currently set at 60% for Trump versus 40% for Biden or a Democrat. Mills indicated that while the market may reassess the situation, he does not expect a broader market reaction.