The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, leading to anticipated volatility.
As Democrats race to consolidate support behind a new candidate—Biden has already endorsed Vice President Kamala Harris—economic uncertainty is expected to increase.
Josh Thompson, CEO of Impact Health USA, shared his insights with Yahoo Finance, 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.” He noted that investors typically favor stability, and a major political shift could disrupt that.
This uncertainty may drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient in politically and economically turbulent times.
Additionally, there is concern that the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt, may stall. This term describes the market’s responses to expectations surrounding a potential second Trump administration. Historically, Trump has been favored by business sectors, and a second term could benefit healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated in a note to CNBC last week that while the market may reassess its strategies with Biden’s exit, he does not foresee a significant overall market impact. He maintained a 60% probability for Trump to win versus 40% for Biden or another Democratic candidate.