The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, leading to expected volatility.
Biden’s potential exit from the race introduces notable economic uncertainty, particularly as Democrats scramble to rally behind a new candidate, with Biden reportedly endorsing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, stated over the weekend, “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.”
This unpredictability could drive investors toward safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Moreover, the so-called “Trump Trade,” which has gained momentum in recent weeks following Donald Trump’s strong debate performance against Biden and his recent health scare, could experience a slowdown. The term refers to how market behaviors reflect investor sentiment regarding the likelihood of a second Trump administration. During his presidency, Trump had a pro-business agenda that significantly benefited sectors including healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction,” as stated in a note to CNBC last week.
Will Gavin contributed to this report.