The stock market is poised for a reaction as President Joe Biden announces he will not seek reelection, potentially leading to significant volatility. This political shift is expected to create economic uncertainty, prompting Democrats to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris.
Josh Thompson, CEO of Impact Health USA, commented that such a withdrawal would likely result in a “volatility and uncertainty” in the markets, as investors typically favor stability in their investments. This atmosphere of doubt could drive investors towards safer assets like gold, silver, and the Swiss franc, which are often more resilient during times of political and economic upheaval.
Additionally, the “Trump Trade” phenomenon, characterized by market reactions to the prospect of a second Trump administration, may experience a slowdown. This trading trend has gained traction following Trump’s debate performance against Biden and his survival of an assassination attempt.
The Trump Trade reflects investors’ responses anticipating market conditions under a potential second term for Trump, who previously favored business interests as president. Industries likely to benefit in such a scenario include healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and the Trump Media and Technology Group.
However, Raymond James Washington policy analyst Ed Mills noted that while a withdrawal from the race would not prompt an immediate alteration of electoral odds—currently estimated at 60% for Trump versus 40% for Biden or another Democrat—there could still be a reassessment of the market’s Trump Trade. Nevertheless, Mills does not foresee a wider market reaction triggered by Biden’s announcement.