The stock market is bracing for volatility as President Joe Biden announces he will not seek reelection. This announcement is likely to heighten economic uncertainty as Democrats pivot to support a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented on the situation, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty may drive investors toward safe-haven assets such as gold, silver, and the Swiss franc, which typically perform better during times of political and economic upheaval.
Moreover, this development could impact the ongoing “Trump Trade,” which has gained momentum after former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The “Trump Trade” signifies investor behavior and trading patterns influenced by the prospect of a second Trump administration. Trump’s presidency was favorable to business interests, and sectors like healthcare, banking, cryptocurrency, oil stocks, and Tesla, along with Trump Media and Technology Group, are anticipated to benefit if he were to reclaim the presidency.
Ed Mills, a policy analyst at Raymond James, noted that while the electoral odds currently favor Trump (60%) over Biden or another Democrat (40%), a Biden exit could stall the “Trump Trade” as the market reassesses the political landscape, although he does not foresee a drastic broader market response.