The stock market is poised to open with significant volatility tomorrow following the announcement that President Joe Biden will not seek reelection.
Analysts suggest that tech stocks, including giants like Nvidia and Apple, might receive a boost from anticipated Federal Reserve rate cuts. However, the political landscape is shifting as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris to be the nominee.
Josh Thompson, CEO of Impact Health USA, stated that Biden’s decision could lead to market instability. “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” he remarked, noting that investors typically favor stability.
This political uncertainty may drive investors to safer assets such as gold, silver, and the Swiss franc, which tend to be less affected by economic fluctuations.
Additionally, there may be a pause in the so-called “Trump Trade,” which has gained traction since the former president’s strong debate performances and surviving an assassination attempt. This term reflects market behaviors and investor strategies in anticipation of a second Trump administration, which has historically been favorable for certain sectors including healthcare, banking, cryptocurrency, oil, and electric vehicle stocks like Tesla, as well as Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while a shift in the race could stall the recent “Trump trade,” it would not drastically alter the electoral odds, currently at 60% for Trump and 40% for Biden/Democrats.