The stock market is set to experience volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This decision is expected to create economic uncertainty as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that if Biden withdraws from the race, the market will likely respond with fluctuations and instability. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated.
In light of this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic turbulence.
Additionally, the announcement might lead to a slowdown in the “Trump Trade.” This term refers to market behaviors and investment patterns that arise in response to the possibility of a second Trump administration, especially after Donald Trump’s recent strong debate performance and survival of an assassination attempt. A second Trump presidency is anticipated to benefit sectors including healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while Biden’s exit could stall recent market trends associated with Trump, it may not lead to a significant overall market reaction. He stated that the electoral odds would not be immediately shifted, currently holding at 60% for Trump versus 40% for either Biden or a Democratic alternative.