The stock market is set to react tomorrow following the announcement that President Joe Biden will not seek reelection, which is likely to lead to increased volatility.
This decision is poised to introduce significant economic uncertainty as Democrats rally around a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Josh Thompson, CEO of Impact Health USA, noted that Biden’s withdrawal could trigger immediate market instability. He explained that investors typically favor stability, and such a major political change would disrupt market predictability.
As a result, investors may shift toward safe-haven assets such as gold, silver, and the Swiss franc, which are often viewed as more stable during times of political and economic turmoil.
Additionally, this development may pause the “Trump Trade,” a phenomenon that has picked up momentum since former President Donald Trump outperformed Biden in recent debates and survived an assassination attempt. The Trump Trade reflects how market behavior and investor strategies respond to the potential for another Trump administration, which has typically favored sectors like healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Despite the potential impacts, analyst Ed Mills from Raymond James mentioned that while reassessments of the electoral landscape may occur, their electoral odds remain unchanged at 60% for Trump versus 40% for Biden or another Democrat. He also indicated that a broader market reaction is not anticipated if Biden departs the race.