The stock market is poised for a volatile reaction tomorrow following the announcement that President Joe Biden will not seek reelection. This news is expected to bring economic uncertainty to the forefront as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, stated that if Biden officially announces his withdrawal, the market is likely to experience immediate volatility and uncertainty. He emphasized that investors typically favor stability, and a significant political change could disrupt that equilibrium.
As a result of this uncertainty, investors may be drawn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, this announcement could have implications for the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and overcame an assassination attempt. The Trump Trade reflects how market behaviors shift based on expectations of a second Trump administration, which is seen as favorable to various 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 from the race could cause a pause in the Trump Trade as the market recalibrates, he does not foresee a significant broader market response.