The stock market is likely to experience volatility tomorrow in light of President Joe Biden’s announcement that he will not seek reelection. This news raises questions about economic stability as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris.
Josh Thompson, CEO of Impact Health USA, shared with Yahoo Finance that the market is expected to react with uncertainty to Biden’s withdrawal. He emphasized that investors typically favor stability, and a significant political change would disrupt that preference.
As a response to this uncertainty, investors may turn towards safe-haven assets, including gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, this development could lead to a slowdown in the so-called “Trump Trade,” a market trend that has gained traction following former President Donald Trump’s strong debate performance against Biden and surviving an assassination attempt. The Trump Trade reflects investor behavior in anticipation of a possible second Trump administration, which is seen as favorable for various sectors, including healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while a shift in electoral odds may not immediately occur, the market might reevaluate the current race, potentially leading to a temporary stall in the Trump Trade, though he does not foresee a widespread market reaction.