The stock market is poised for turbulence when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This development introduces a wave of economic uncertainty as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that the news could lead to immediate market volatility. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Another potential outcome is a slowdown of the “Trump Trade,” which has been gaining momentum since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. This trade refers to the market’s response to the prospect of another Trump administration, particularly beneficial for sectors like healthcare, banking, cryptocurrency, oil, and stocks of companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, commented that while Biden’s departure may cause a reassessment of the electoral chances, he does not foresee immediate changes in their electoral odds (60% Trump versus 40% Biden/Dem). He also indicated that a broader market reaction is not anticipated at this time.