The stock market is set to experience volatility tomorrow, fueled by the news that President Joe Biden will not seek reelection. This announcement is expected to create economic uncertainty as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, noted that a withdrawal by President Biden from the race would likely lead to immediate market fluctuations. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he said.
In light of this uncertainty, investors may gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which are traditionally less sensitive to political and economic fluctuations.
Additionally, there could be a slowdown in what is termed the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects how market movements are influenced by the prospect of a second Trump administration, which is seen as favorable for sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while Biden’s exit from the race might not lead to an immediate revision of electoral odds (currently at 60% for Trump versus 40% for Biden or Democrats), it could stall the current Trump Trade as the market reevaluates the political landscape without seeing a drastic broader market reaction.