The stock market is set to open tomorrow amid reports that President Joe Biden will not seek reelection, which is expected to create significant volatility.
Analysts point to Starbucks and Home Depot as indicators that consumers are reaching their limits, contributing to economic uncertainty as Democrats work to rally support for a new candidate, potentially Vice President Kamala Harris, who Biden has endorsed.
Josh Thompson, CEO of Impact Health USA, commented on the potential market response to Biden’s withdrawal, stating that such a political shift would likely introduce volatility and uncertainty, as investors typically favor stability. This uncertainty may lead investors to turn to safe-haven assets like gold, silver, and the Swiss franc, which are generally less affected by political and economic turmoil.
The situation could also impact the so-called “Trump Trade,” which has gained traction after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. This trade reflects investors’ trading behaviors in anticipation of a potential second Trump administration, as he is perceived to be business-friendly, specifically benefiting sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, mentioned that while an immediate shift in electoral odds is not anticipated—currently estimated at 60% for Trump versus 40% for Biden/Democrats—the market may pause in its enthusiasm for the “Trump trade” as it reassesses the election landscape, although a broader market reaction is not expected.