The stock market is anticipated to experience volatility as it opens tomorrow following President Joe Biden’s announcement that he will not seek reelection. This development has sparked economic uncertainty, prompting Democrats to rally around a potential new candidate, with Biden endorsing Vice President Kamala Harris to take his place.
Josh Thompson, CEO of Impact Health USA, indicated that the stock market is likely to react with immediate volatility and uncertainty to Biden’s withdrawal. He noted, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In light of this uncertainty, investors might gravitate toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Moreover, the announcement could impact the “Trump Trade,” a market trend that gained traction after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. This term refers to investor behavior influenced by the possibility of a second Trump administration, which is perceived as business-friendly. Notable sectors expected to benefit from a potential second Trump presidency include healthcare, banking, cryptocurrency, oil stocks, as well as Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted that while Biden’s exit from the race could stall the recent enthusiasm around the “Trump Trade,” the overall electoral odds remain unchanged, with a 60% likelihood for Trump compared to 40% for Biden or a Democratic candidate. He expressed that while market reassessment may occur, a broader market reaction is not anticipated.