The stock market is poised to react to the news that President Joe Biden will not seek reelection, leading to anticipated volatility. This announcement raises significant economic uncertainty as Democrats quickly rally behind a new potential candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, remarked that a possible withdrawal from the race by President Biden would likely trigger immediate market volatility. Investors typically favor stability and predictability, and such a major political change could disrupt that environment.
As a result of this uncertainty, investors might gravitate towards safer assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic shifts.
Additionally, the situation could impact the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a recent debate and survived an assassination attempt. The Trump Trade reflects market behaviors in relation to the expectation of a second Trump administration. Trump, known for his business-friendly policies during his presidency, has seen particular stocks in the healthcare, banking, cryptocurrency, oil sectors, as well as Tesla and the Trump Media and Technology Group, benefit from this trade.
Raymond James policy analyst Ed Mills noted that even if Biden withdraws, their electoral odds would remain unchanged at 60% for Trump versus 40% for Biden or another Democrat. He indicated that a pause in the ongoing Trump trade may occur as the market reevaluates the election landscape, but he does not anticipate a widespread market reaction.