The stock market is expected to experience volatility tomorrow following the news that President Joe Biden will not seek reelection. McDonald’s is currently facing its first lawsuit related to the E. coli outbreak linked to its Quarter Pounder.
The political shift is anticipated to create economic uncertainty as Democrats rally around a new candidate, with Biden endorsing Vice President Kamala Harris to take his place.
Josh Thompson, CEO of Impact Health USA, indicated to Yahoo Finance that if Biden announces his withdrawal, the stock market’s immediate reaction would likely reflect volatility and uncertainty. Investors generally favor stability, and a dramatic political change could disrupt that expectation.
This uncertainty might lead investors to lean towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
In addition, this scenario could also halt the momentum of the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in debates and survived an assassination attempt. The Trump Trade describes the market’s behavior in response to the potential for Trump to return to the presidency. Trump’s administration was viewed as pro-business, benefiting sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit could affect the market, they would not immediately adjust their electoral prediction of 60% for Trump versus 40% for a Democrat. Mills acknowledged a potential pause in the “Trump Trade” as the market reevaluates the electoral landscape, but he does not foresee a widespread market reaction.