The stock market is poised for a tumultuous opening tomorrow as news emerges that President Joe Biden will not seek reelection, creating an atmosphere of heightened volatility.
Investors are bracing for economic uncertainty as Democrats swiftly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the party’s nominee.
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. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This heightened uncertainty may lead investors to flock to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Moreover, analysts speculate that the momentum behind the “Trump Trade” could lose steam. This term describes market trends influenced by the prospect of a second Trump administration, especially after the former president’s strong debate performance against Biden and surviving an assassination attempt.
The Trump Trade reflects how investors adjust their strategies based on the expected policies of a potential second Trump presidency. Sectors likely to benefit include healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla, along with the Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit from the race could stall the recent momentum of the Trump Trade, he does not anticipate a sweeping market reaction. “We would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction,” he wrote in a note to CNBC last week.