The stock market is set to open tomorrow amidst speculation following President Joe Biden’s decision not to seek reelection, a move that could lead to significant volatility.
Nvidia shares are experiencing one of their most tumultuous weeks to date as the markets brace for potential shifts. Biden’s announcement has heightened economic uncertainty, prompting Democrats to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, indicated that the market is likely to react with volatility. “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,” he explained.
In light of this uncertainty, investors may gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which typically perform better during periods of political and economic instability.
Additionally, this development could slow down the “Trump Trade,” which has been gaining momentum since former President Donald Trump’s strong debate performance against Biden and a recent assassination attempt. The “Trump Trade” reflects market reactions to the prospect of another Trump administration, as he has historically been viewed as favorable to business interests. Sectors likely to benefit from a potential second Trump presidency include healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that even with Biden’s exit from the race, they would maintain their electoral odds at 60% for Trump and 40% for Biden/Democratic candidates. He suggested that while the recent “Trump Trade” may stall as the market reassesses the electoral landscape, he does not anticipate a broader market reaction immediately following Biden’s announcement.