The stock market is poised for volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development injects a sense of economic uncertainty as Democrats quickly rally around a potential new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, indicated in a Yahoo Finance interview that the market is likely to react with instability and uncertainty if Biden withdraws from the race. Investors typically favor a stable environment, and this significant political shift would disrupt that.
As a result, investors may turn to safer assets such as gold, silver, and the Swiss franc in response to the heightened political and economic risks.
Additionally, the market may experience a slowdown in what is termed the “Trump Trade,” which has gained momentum since Donald Trump, the former president and current Republican nominee, outperformed Biden in a recent debate and survived an assassination attempt.
The “Trump Trade” encompasses market behavior and investor trading patterns linked to the anticipation of another Trump administration. Trump, known for his business-friendly policies during his presidency, could bolster sectors such as healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group if he wins a second term.
Raymond James Washington policy analyst Ed Mills noted that while a Biden exit from the race could prompt a reassessment of electoral odds, they do not foresee a dramatic market reaction, estimating a continuing probability of 60% for Trump versus 40% for Biden or other Democratic candidates.