The stock market is poised for volatility as news breaks that President Joe Biden will not seek reelection. This announcement is expected to inject economic uncertainty into the landscape as Democrats quickly seek to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that the potential withdrawal of President Biden from the race would likely yield immediate market reactions characterized by volatility and uncertainty. Investors typically favor stability and predictability, and such a significant political change could disrupt these preferences.
In light of this uncertainty, investors may turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the decision could impact the “Trump Trade,” a market trend that has accelerated since Donald Trump, the former president and Republican nominee, outperformed Biden during debates and miraculously survived an assassination attempt. The Trump Trade reflects the market’s response to the potential of a second Trump administration, which is anticipated to favor sectors such as healthcare, banking, cryptocurrency, oil, and prominently, Tesla, along with Trump Media and Technology Group.
While the market may experience a reevaluation if Biden exits the race, Ed Mills, a Washington policy analyst at Raymond James, indicated that there would not be an immediate change in their electoral odds, currently at 60% for Trump versus 40% for Biden/Democrats. Mills noted that while there may be a slowdown in the “Trump Trade,” he does not foresee a broader market reaction.