The stock market is set for a potentially volatile opening tomorrow following President Joe Biden’s announcement that he will not seek reelection. This decision is expected to heighten economic uncertainty as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, stated that if Biden were to formally withdraw from the race, the market would likely react with volatility and uncertainty. Investors typically favor stability, and a major political shift could disrupt this.
Such uncertainty may encourage investors to move toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has been gaining momentum since former President Donald Trump outperformed Biden in debates and survived an assassination attempt. The “Trump Trade” reflects market behavior influenced by the potential for a second Trump administration, which is perceived to favor various sectors, including healthcare, banking, cryptocurrency, oil stocks, and notably, Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that even if Biden exits the race, the electoral odds may not change significantly with Trump at 60% and Biden or another Democrat at 40%. While there might be a reassessment of the “Trump Trade,” a broader market impact is not anticipated.