The stock market is poised to open tomorrow amid news that President Joe Biden has decided not to seek reelection, which is expected to cause considerable volatility.
The announcement is likely to spotlight economic uncertainty as Democrats quickly rally behind a new potential candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
“Should President Biden announce that he will not run for reelection, the initial market response would probably be marked by volatility and uncertainty,” stated Josh Thompson, CEO of Impact Health USA, in a recent interview. “Investors typically favor stability and predictability, and such a significant political development would disrupt that.”
This uncertainty may lead investors to seek refuge in safer assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, this situation could halt the momentum of the “Trump Trade,” which has surged after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt.
The Trump Trade reflects market trends influenced by the prospects of a second Trump administration. During his presidency, Trump, known for his real estate background and various other business endeavors, cultivated favorable conditions for business interests. Sectors anticipated to benefit from another Trump administration include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
“While Biden’s potential exit could affect our electoral odds (currently 60% for Trump and 40% for Biden/Democrats), we do not foresee an immediate shift in the market overall,” remarked Ed Mills, a Washington policy analyst at Raymond James, in a note to CNBC last week.