The stock market is poised for a tumultuous opening tomorrow following the news that President Joe Biden will not seek reelection, a development likely to create significant volatility.
AT&T is divesting its stake in DirecTV, a decision that may heighten economic uncertainty as Democratic leaders scramble to rally support behind a new candidate. Biden has publicly endorsed Vice President Kamala Harris as his successor.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction could be marked by volatility and uncertainty,” said Josh Thompson, CEO of Impact Health USA, in a statement to Yahoo Finance over the weekend. “Investors generally favor stability and predictability, and such a transformative political change would disrupt both.”
This uncertainty may prompt investors to shift towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the ongoing “Trump Trade,” which has gained traction since Donald Trump, the former president and current Republican nominee, outperformed Biden in a debate and survived an assassination attempt, could face a slowdown. This trade captures how market dynamics shift in response to the prospects of a second Trump administration. During his presidency, Trump, with a background as a real estate mogul, was viewed favorably by business interests. Notable sectors expected to benefit from a potential Trump presidency include healthcare, banking, cryptocurrency, and oil stocks, along with Tesla and Trump Media and Technology Group.
“Should Biden exit the race, we wouldn’t immediately overhaul our electoral odds (60% Trump versus 40% Biden/Dem). While we may witness a temporary stagnation of the recent ‘Trump trade’ as the market reevaluates the race, we do not anticipate a broader market reaction,” remarked Ed Mills, a Washington policy analyst at Raymond James, in a note shared with CNBC last week.