The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This news is expected to create significant volatility, particularly as the Democratic Party scrambles to rally around a new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed that if President Biden officially withdraws from the race, the immediate market response would likely be one of heightened volatility. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This potential instability may lead investors to gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which tend to perform better during times of political and economic uncertainty.
Additionally, the so-called “Trump Trade,” a market trend driven by investor sentiment towards a possible second Trump administration, could experience a slowdown. The term refers to market behaviors and trading patterns that respond positively to Donald Trump’s prospects as a future presidential candidate. Historically, his presidency was advantageous to various sectors, including healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Despite these changes, Ed Mills, a Washington policy analyst at Raymond James, noted in a report shared with CNBC that the electoral odds (60% Trump versus 40% for Biden or any Democratic candidate) would not be immediately altered. Mills suggested that while there might be a stall in the “Trump Trade,” he does not anticipate broader market impacts from Biden’s potential exit from the race.