The stock market is poised for a tumultuous opening tomorrow, following the announcement that President Joe Biden will not seek reelection, likely leading to significant volatility.
Nvidia has been experiencing one of its most challenging weeks in the stock market. The news of Biden’s decision introduces economic uncertainty, prompting Democrats to quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, mentioned to Yahoo Finance that if Biden officially announces his exit from the race, the immediate market response will likely be characterized by volatility and unpredictability. He noted that investors typically favor stability, and such a major political shift would disrupt that.
In light of this uncertainty, investors might shift their focus toward safe-haven assets like gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic instability.
Another potential outcome is a slowdown in the so-called “Trump Trade,” which gained momentum after former President Donald Trump surpassed Biden in a debate and survived an assassination attempt. The Trump Trade reflects investor behavior in anticipation of a second Trump administration, as Trump, having previously favored business interests during his presidency, could benefit sectors such as healthcare, banking, cryptocurrency, and oil, along with companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, stated in a note to CNBC last week that even if Biden withdraws from the race, their electoral odds would remain at 60% for Trump versus 40% for Biden or another Democratic candidate. Mills suggested that while the recent “Trump trade” might pause as the market reassesses the election landscape, a broader market reaction is not anticipated.