The stock market is poised for fluctuations as news breaks that President Joe Biden will not seek reelection, creating an atmosphere of uncertainty.
This decision is expected to elevate economic concerns as Democrats scramble to rally behind a new candidate, with Biden having expressed support for Vice President Kamala Harris to take the lead.
Josh Thompson, CEO of Impact Health USA, highlighted the probable market volatility stemming from Biden’s withdrawal, stating that investors typically prefer stability, and such a major political change would upset that balance.
In light of this uncertainty, investors may gravitate toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less influenced by political and economic turmoil.
Additionally, the news could signal a slowdown in the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performances and his recent survival of an assassination attempt.
The “Trump Trade” refers to market behaviors reflecting investor sentiments towards a potential second Trump administration. Under Trump’s previous presidency, certain sectors, including healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group, saw significant benefits.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit from the race might prompt a reassessment of the electoral landscape, the firm does not anticipate a major shift in broader market dynamics, maintaining a divided outlook of 60% in favor of Trump versus 40% for Biden or another Democrat.