The stock market is anticipated to experience increased volatility as it opens tomorrow, following the news that President Joe Biden will not seek reelection. This announcement brings economic uncertainty to the forefront as Democrats prepare to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Economist Josh Thompson, CEO of Impact Health USA, commented that Biden’s withdrawal would likely lead to immediate market instability. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
This uncertainty may lead investors to turn toward safe-haven assets such as gold, silver, and the Swiss franc, which are typically less sensitive to political and economic changes.
Additionally, there could be a slowdown in the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and narrowly escaped an assassination attempt. The “Trump Trade” reflects market behaviors in response to the potential return of Trump to the White House, with anticipated beneficiaries including healthcare, banking, cryptocurrency, and oil sectors, along with Tesla and Trump Media and Technology Group.
Raymond James policy analyst Ed Mills noted that while Biden’s exit might prompt the market to reassess the race, he does not foresee a significant broader market reaction. The current electoral odds remain at 60% in favor of Trump versus 40% for Biden or the Democrats.