The stock market is anticipated to experience increased volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development raises economic uncertainty as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market impact, stating that Biden’s withdrawal would likely provoke volatility and uncertainty, as investors typically favor stability in the political landscape.
This uncertainty may lead investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic upheaval.
Another consequence could be a slowdown in what is often referred to as the “Trump Trade.” This trend has gained traction since former President Donald Trump, the Republican nominee, notably outperformed Biden in a recent debate and survived an assassination attempt.
The “Trump Trade” encapsulates market behaviors based on investor speculation about a possible second Trump administration, which is projected to favor sectors like healthcare, banking, cryptocurrency, and oil, along with companies such as Tesla and Trump Media and Technology Group.
Raymond James policy analyst Ed Mills noted that while market dynamics may shift in response to Biden leaving the race, they do not foresee a major market reaction, keeping electoral odds at 60% in favor of Trump versus 40% for Biden or Democratic candidates.