The stock market is set for an unpredictable opening tomorrow following President Joe Biden’s announcement that he will not seek reelection, leading to anticipated volatility.
Biden’s decision introduces significant economic uncertainty as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to exit the race, the market would likely react with volatility due to investors’ preference for stability. This political shift could drive investors towards safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, the “Trump Trade,” which has gained traction since Donald Trump outperformed Biden in a recent debate and survived an assassination attempt, may also experience a slowdown. This trade reflects investors’ reactions to the potential of Trump’s return to the White House, especially as he was perceived as pro-business during his presidency. Key sectors poised to benefit from a potential second Trump term include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills suggested in a note to CNBC that while the market might stall in its recent enthusiasm for Trump, the broader market impact is not expected to be significant, maintaining an electoral odds estimate of 60% for Trump versus 40% for Biden or another Democratic candidate.