The stock market is set to react tomorrow to the news that President Joe Biden will not be pursuing reelection, likely leading to significant volatility. This decision injects economic uncertainty as Democrats rally to support a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, noted that Biden’s withdrawal from the race would likely result in immediate market fluctuations, as investors generally favor stability and predictability. Such a political shift could drive investors toward safe-haven assets like gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic instability.
Moreover, this development may stymie the “Trump Trade,” a market trend that gained traction following Donald Trump’s strong performance in a debate with Biden and following a recent assassination attempt. The “Trump Trade” reflects the market’s response to the possibility of a second Trump administration, which is anticipated to benefit sectors such as healthcare, banking, cryptocurrency, oil, as well as companies like Tesla and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that despite the potential for volatility, his firm would maintain its electoral odds of 60% for Trump versus 40% for Biden or another Democrat candidate. Mills suggested there could be an initial damping of the “Trump Trade” as the market re-evaluates the electoral landscape, but he does not foresee a significant reaction across the broader market.