Tomorrow, the stock market will react to the announcement that President Joe Biden will not seek reelection, likely leading to increased volatility. This decision casts economic uncertainty into the spotlight as Democrats rally behind a new potential candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, indicated that such a significant political shift would prompt immediate market turbulence. “Investors generally prefer stability and predictability, and the announcement of President Biden’s withdrawal would disrupt both,” he explained.
This uncertainty may drive investors toward safe-haven assets, including gold, silver, and the Swiss franc, which tend to be less sensitive to political and economic fluctuations.
Additionally, the market may see a slowdown in what is known as the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects the market’s response to the potential for a second Trump administration, with sectors like healthcare, banking, cryptocurrency, oil, and companies like Tesla and the Trump Media and Technology Group expected to benefit.
However, Raymond James policy analyst Ed Mills noted that while there may be a reassessment of the political landscape, they are not likely to alter their electoral odds of 60% for Trump versus 40% for Biden/Democrats. Mills commented that while the Trump Trade might stall, a broader market reaction is not anticipated.