Tomorrow, the stock market is set to react to the announcement that President Joe Biden will not seek reelection, leading to expected volatility. Analysts suggest that investors should consider buying stocks from Costco and American Express as inflation appears to be easing.
Biden’s decision is likely to bring economic uncertainty as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market impact, 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.” He noted that investors typically favor stability and predictability, and such a major political development would disrupt that.
This uncertainty may drive investors toward safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s recent debate performance and a personal security scare, could face a pause. This trading phenomenon reflects how investors respond to the possibility of a second Trump administration. Trump, who was known for his business-friendly policies during his presidency, is seen as a potential benefactor for sectors like healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while Biden’s exit could slow the “Trump trade,” it may not drastically alter electoral odds, currently estimated at 60% for Trump and 40% for Biden or another Democrat. Mills expressed that a broader market shift is not anticipated at this time.