Tomorrow, the stock market is set to open amid significant news that President Joe Biden will not seek reelection, leading to an expected increase in volatility.
A recent study suggests that California’s new $20 minimum wage for fast food employees has not led to job losses. With Biden’s withdrawal from the race, economic uncertainty is likely to take center stage as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, commented on the potential market reaction, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty could drive investors towards safe-haven assets, such as gold, silver, and the Swiss franc, which are typically less affected by political and economic fluctuations.
Additionally, there could be a slowdown in what is referred to as the “Trump Trade.” This term describes market behaviors and investor patterns in response to the prospect of a second Trump administration. Donald Trump, who previously enjoyed a business-friendly presidency, is perceived to benefit sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and his own media company.
Raymond James Washington policy analyst Ed Mills mentioned that while they might not adjust their electoral odds (currently 60% Trump vs. 40% Biden/Dem), they could witness a pause in the “Trump trade” as the market reevaluates the electoral landscape, although a broader market reaction may not occur.