The stock market is poised for a tumultuous opening tomorrow following the announcement that President Joe Biden will not seek reelection, leading to anticipated volatility.
Strategists suggest that Biden’s exit from the race introduces considerable economic uncertainty, prompting Democrats to rally around a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, stated, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty may drive investors towards safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there is speculation about a slowdown in the “Trump Trade,” a market phenomenon that gained traction after former President Donald Trump’s strong debate performance against Biden and his recent assassination attempt survival. This trade reflects investor behavior in anticipation of a potential second Trump administration, as Trump, known for his business-friendly policies during his presidency, could benefit sectors like healthcare, banking, cryptocurrency, oil, and companies like Tesla, as well as Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, remarked that while Biden’s departure might not lead to an immediate reassessment of electoral odds—currently estimating 60% for Trump versus 40% for Biden or another Democratic candidate—there could be a pause in the recent trend of the “Trump trade” as investors reevaluate the political landscape without Biden in the race.