The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to create significant economic uncertainty, particularly as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Market analysts predict a likely immediate reaction of volatility and uncertainty, given that investors typically seek stability. Josh Thompson, CEO of Impact Health USA, suggested that Biden’s withdrawal could disrupt the predictability that investors favor, leading many to gravitate towards safer assets like gold, silver, and the Swiss franc, which tend to be less influenced by political and economic fluctuations.
Another potential outcome could be a slowdown in what is known as the “Trump Trade.” This term describes the market’s behaviors related to the prospect of a second term for former President Donald Trump, who has seen a resurgence after performing well in a recent debate and surviving an assassination attempt. Historically, the market has favored sectors such as healthcare, banking, cryptocurrency, and oil under Trump’s administration, along with companies like Tesla and Trump Media and Technology Group.
Despite these developments, some analysts believe that the overall market reaction may be limited. Ed Mills, a policy analyst at Raymond James, stated that while there might be a brief pause in the “Trump Trade” as the market reassesses the election landscape, they would not alter their electoral odds of 60% for Trump versus 40% for the Democratic nominee in response to Biden’s departure.