The stock market is set to face a wave of volatility following President Joe Biden’s decision not to seek reelection, which has emerged as a major talking point in the political landscape.
As various Democrats rally around a potential new candidate—Biden has endorsed Vice President Kamala Harris as the nominee—the uncertainty surrounding this decision is expected to impact investor sentiment.
Josh Thompson, CEO of Impact Health USA, commented that if Biden were to formally announce his withdrawal, it would likely lead to immediate market volatility. He noted that investors typically favor stability, and such a major political change would significantly disrupt that.
In light of this uncertainty, many investors may lean towards safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, this development could slow the momentum of the so-called “Trump Trade.” This term refers to market behavior influenced by the prospects of Donald Trump securing a second term. Trump, who previously fostered a pro-business environment during his presidency, has seen increased market enthusiasm after recent public appearances, including his performance in a debate against Biden.
Ed Mills, a Washington policy analyst with Raymond James, indicated that while Biden’s exit could impact perceptions of electoral odds—currently estimated at 60% for Trump and 40% for Biden or a Democratic alternative—he does not anticipate a significant immediate market shift. The reassessment of the race might cause the “Trump Trade” to stall temporarily, but overall market reactions are not expected to be dramatic.