The stock market is set to experience notable volatility as it prepares to open tomorrow in light of President Joe Biden’s decision not to seek reelection. The announcement coincides with the significant acquisition of Kellanova, the maker of Pop-Tarts, by Mars, the producer of M&M candies, representing one of the year’s largest corporate deals.
This political development has sparked economic uncertainty, particularly as Democrats rally around a potential new candidate. Biden has voiced his support for Vice President Kamala Harris to be the party’s nominee.
Market experts predict that if Biden officially withdraws from the race, investors may react with volatility and trepidation. Josh Thompson, CEO of Impact Health USA, stated, “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors might gravitate towards safe-haven assets like gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic turmoil.
Additionally, there is speculation that the “Trump Trade,” which has gained momentum following favorable performances by former President Donald Trump, could stagnate. This trade reflects the market sentiment surrounding the possibility of another Trump administration, which is expected to benefit sectors like healthcare, banking, cryptocurrency, oil, 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.”