The stock market is set to react tomorrow to the news that President Joe Biden has decided not to seek reelection, a development that is likely to spur significant volatility.
Trump Media has been experiencing a significant decline in its stock performance.
This announcement is expected to elevate economic uncertainty as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
According to Josh Thompson, CEO of Impact Health USA, the immediate market response to Biden’s withdrawal could be characterized by volatility and apprehension. Investors typically favor stability and predictability, and such a dramatic political shift would disrupt those preferences.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, known for their resilience during political and economic turmoil.
Additionally, this political landscape may lead to a slowdown in the so-called “Trump Trade,” which gained traction following the former president’s strong debate performance and a recent assassination attempt.
The “Trump Trade” describes market activity reflecting investor behaviors in response to the potential re-election of Donald Trump. Despite prior challenges in various business ventures, Trump was viewed as business-friendly during his presidency. Sectors expected to benefit from another Trump administration include healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted in a report that if Biden exits the race, they would not immediately alter their electoral odds (60% Trump versus 40% Biden/Democrat). While a reassessment of the race could temporarily stall the “Trump trade,” a more widespread market impact is not anticipated.