The stock market is set to react tomorrow to the news that President Joe Biden will not seek reelection, with volatility expected to follow.
Analysts are predicting that tech stocks, including giants like Nvidia and Apple, may receive a boost from potential Federal Reserve interest rate cuts. This development will likely highlight economic uncertainty as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, remarked that the market’s immediate response to Biden’s withdrawal would probably be marked by volatility and uncertainty. He emphasized that investors typically favor stability, and such a major political shift could disturb that.
This atmosphere of uncertainty could drive investors towards safe-haven assets, like gold, silver, and the Swiss franc, which tend to perform better during political and economic turmoil.
There is also the possibility that the “Trump Trade,” which has gained traction since former President Donald Trump surpassed Biden in a debate and survived an assassination attempt, may encounter a slowdown. The term “Trump Trade” describes the shifts in market behavior influenced by the anticipation of a second Trump administration. Trump, who previously had friendly policies toward business, is seen as a favorable figure for sectors such as healthcare, banks, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, indicated that while a Biden exit from the race could disrupt immediate market trends, they do not foresee a significant broader market reaction, keeping their electoral odds at 60% for Trump versus 40% for Biden or another Democrat.