The stock market is set to experience heightened volatility tomorrow in light of President Joe Biden’s announcement that he will not seek reelection. This decision is expected to bring economic uncertainty to the forefront as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris.
Josh Thompson, CEO of Impact Health USA, expressed that Biden’s exit from the race would likely trigger immediate market instability. Investors tend to favor stability, and such a significant political shift could disrupt the market’s current dynamics.
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which are typically more resistant to political and economic turbulence.
Moreover, this development could impact the ongoing “Trump Trade,” which has gained momentum since former President Donald Trump excelled in a recent debate and survived an assassination attempt. The Trump Trade reflects market behaviors influenced by the expectations surrounding a potential second Trump administration. If re-elected, certain sectors such as healthcare, banking, cryptocurrency, and oil stocks, along with Tesla and Trump Media and Technology Group, are anticipated to benefit.
Despite these developments, Raymond James policy analyst Ed Mills noted that the electoral odds would remain unchanged at 60% for Trump and 40% for a Biden/Democrat candidate. Mills suggested that while the recent momentum of the “Trump Trade” might stall as the market recalibrates, he does not foresee a significant overall market reaction.