The stock market is projected to experience volatility when it opens tomorrow following President Joe Biden’s announcement that he will not seek reelection. This shift introduces economic uncertainty as Democrats work to rally support behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented on this development, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
Investor uncertainty may lead to a movement toward safe-haven assets, such as gold, silver, and the Swiss franc, which often perform better during times of political and economic instability.
Additionally, this announcement could impact the so-called “Trump Trade,” which has seen increased support since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” reflects market behaviors and investment patterns tied to the speculation of a second Trump administration, with anticipated benefits for sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated in a note that although the announcement may stall momentum for the “Trump Trade,” they do not expect dramatic changes to the electoral odds, currently estimated at 60% in favor of Trump versus 40% for Biden or a Democratic nominee.