The stock market is set to experience significant volatility as President Joe Biden has announced he will not seek reelection. This unexpected decision has raised concerns about economic stability and has prompted Democrats to quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Market experts anticipate that the announcement will lead to immediate fluctuations. Josh Thompson, CEO of Impact Health USA, stated, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In light of this uncertainty, investors may turn to safer assets like gold, silver, and the Swiss franc, which tend to be less impacted by political and economic turmoil.
Additionally, there is speculation about a possible slowdown in the so-called “Trump Trade.” This term describes the market behavior surrounding expectations of a second Trump administration, particularly after the former president’s notable debate performances and recent events that have drawn public attention. Trump, known for his favorable stance toward business during his presidency, could benefit sectors such as healthcare, banking, cryptocurrency, and oil stocks, alongside Tesla and his media enterprise.
Ed Mills, a policy analyst at Raymond James, remarked that while Biden’s exit could lead to a reassessment of the race, he does not predict a broad market reaction right away. He maintains the electoral odds at 60% for Trump and 40% for Biden or a Democrat alternative.