The stock market is set to open tomorrow amidst speculation that President Joe Biden will not seek reelection, which is likely to lead to significant volatility.
The political landscape is shifting as Democrats quickly rally behind a potential new candidate, with Biden reportedly endorsing Vice President Kamala Harris. This change in leadership could heighten economic uncertainty.
Josh Thompson, CEO of Impact Health USA, noted that if Biden were to announce his withdrawal from the race, the market would likely experience immediate volatility and uncertainty. Investors typically favor stability, and a major political shift could disrupt that.
Such uncertainty might drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which are less affected by political and economic disruptions.
Additionally, the market might see a slowdown in the so-called “Trump Trade.” This term describes the trading behavior of investors anticipating a potential second term for former President Donald Trump, who has gained traction since he outperformed Biden in debates and survived a recent assassination attempt. The “Trump Trade” often favors sectors like healthcare, banking, cryptocurrency, oil stocks, and companies such as Tesla and Trump Media and Technology Group.
Despite these changes, Raymond James policy analyst Ed Mills indicated that if Biden were to leave the race, they would not immediately revise their electoral odds, which currently stand at 60% for Trump versus 40% for Biden or another Democrat. He suggested that while the “Trump Trade” might stall as the market recalibrates, he does not foresee a broader market reaction.