The stock market is set to experience significant volatility following the news that President Joe Biden will not seek reelection. As Democrats scramble to support a new candidate, Biden has endorsed Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, warned that this political development could lead to immediate market uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
In reaction to this uncertainty, investors may turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
The news may also impact the “Trump Trade,” a phenomenon that has gained traction since former President Donald Trump surpassed Biden in debates and managed to survive an assassination attempt. This trade reflects how investors respond to the potential of a second Trump administration, which is anticipated to benefit sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Despite Biden’s announcement, Raymond James policy analyst Ed Mills indicated that their electoral odds would remain unchanged at 60% for Trump and 40% for Biden or another Democrat. Mills suggested the market might temporarily reassess the “Trump trade” but does not foresee a broader market impact.