The stock market is expected to experience heightened volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This development comes as Democrats are racing to unite behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, expressed that Biden’s withdrawal would likely lead to market instability. He highlighted that investors typically favor stability and predictability, and a sudden political shift could disrupt these preferences.
In response to this uncertainty, investors might gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to perform better during times of political and economic instability.
Another implication of Biden’s decision could be a slowdown in what’s known as the “Trump Trade.” This term refers to the market’s response to the prospect of a second Trump administration, particularly following Donald Trump’s strong performance in recent debates and his narrow escape from an assassination attempt. Investors have been keen on stocks in sectors like healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group, which are seen as likely beneficiaries of a Trump presidency.
Raymond James policy analyst Ed Mills noted that while the electoral odds might not change dramatically—currently standing at 60% for Trump versus 40% for Biden or another Democrat—market reactions may stabilize as investors reassess the landscape.