The stock market is set to open tomorrow amid the significant news that President Joe Biden will not seek reelection, which is expected to lead to increased volatility.
Analysts suggest that investors may no longer view Nvidia as the top stock choice and recommend looking into alternative investments instead.
The announcement will likely bring economic uncertainty to the forefront, as Democrats scramble to rally behind a new candidate, with Biden having endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, indicated that the market would likely react with volatility and uncertainty to Biden’s withdrawal. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained to Yahoo Finance over the weekend.
This uncertainty could result in a shift towards safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
There is also the possibility of a slowdown in the “Trump Trade,” which had been gaining momentum following former President Donald Trump’s strong performance in a debate against Biden and his survival of an assassination attempt.
The “Trump Trade” refers to market behaviors linked to investor reactions anticipating a second Trump administration. Trump, known for his business-friendly policies during his presidency, could potentially benefit sectors such as healthcare, banking, cryptocurrency, and oil, alongside companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted in a note to CNBC last week that while they might not immediately change the electoral odds (projecting 60% for Trump against 40% for Biden/Democrats), the market may reassess the race, potentially stalling the “Trump trade” without triggering a broader market reaction.