The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to heighten economic uncertainty as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that the market’s immediate reaction to Biden’s withdrawal would likely be marked by volatility and uncertainty. He noted that investors tend to favor stability and predictability, and such a significant political change could disrupt those sentiments.
As a result of this uncertainty, investors may gravitate toward safe-haven assets such as gold, silver, and the Swiss franc, which typically perform better during periods of political and economic instability.
Additionally, the recent momentum of the “Trump Trade,” which reflects investor behavior in anticipation of a second Trump administration, could slow down. The Trump Trade gained traction after the former president’s strong debate performance against Biden and his survival of an assassination attempt.
The Trump Trade is characterized by the favorable response of various sectors to the prospect of a Trump presidency, particularly healthcare, banking, cryptocurrency, and oil stocks, along with companies like Tesla and Trump Media and Technology Group.
However, Ed Mills, a Washington policy analyst at Raymond James, mentioned that while the electoral odds might not shift dramatically—currently estimated at 60% for Trump and 40% for Biden or a Democratic candidate—the market may reassess the landscape, leading to potential stagnation in the Trump Trade without triggering broader market ramifications.