The stock market is poised for a significant opening tomorrow following news that President Joe Biden will not seek reelection, a development likely to lead to increased volatility.
In a major business move, Mars, the maker of M&M’s, is set to acquire Kellanova, the company behind Pop-Tarts, marking one of the year’s largest transactions.
This announcement places economic uncertainty back in the spotlight as Democrats work to unify behind a new candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, commented, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely reflect volatility and uncertainty. Investors typically favor stability, and such a significant political change would disrupt that.”
This uncertainty might lead investors to turn toward safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Furthermore, there may be a slowdown in what has been termed the “Trump Trade,” which gained traction after former President Donald Trump outperformed Biden during a debate and survived an assassination attempt.
The “Trump Trade” describes market behaviors related to the anticipation of a second Trump administration. During his presidency, Trump, who previously faced challenges in various business ventures, was seen as pro-business. Sectors like healthcare, banking, cryptocurrency, and oil, along with Tesla and Trump Media and Technology Group, could particularly benefit from another Trump’s term.
Raymond James Washington policy analyst Ed Mills indicated, “If Biden exits the race, we would not immediately alter our electoral odds (60% Trump versus 40% Biden/Dem). We might see a pause in the recent ‘Trump trade’ as the market reassesses the situation, but we do not expect a broader market reaction.”