The stock market is poised for a volatile opening tomorrow following the announcement that President Joe Biden will not seek reelection. This development is expected to bring economic uncertainty to the forefront as Democrats work to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
According to Josh Thompson, CEO of Impact Health USA, the market will likely react with volatility and uncertainty to Biden’s withdrawal from the race. He noted that investors typically favor stability and predictability, and such a significant political change would disrupt those preferences.
This uncertainty may drive investors towards safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
There is also the potential for a slowdown in what is known as the “Trump Trade,” which has gained traction following former President Donald Trump’s recent debate performance, in which he outperformed Biden, and his survival of an assassination attempt. The “Trump Trade” reflects investors’ trading patterns in response to the prospect of a second Trump administration. During his presidency, Trump, who had a background in real estate, was favorable toward business interests. Stocks in sectors such as healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group are expected to benefit if Trump returns to the White House.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while they do not anticipate immediate changes to electoral odds—currently standing at 60% for Trump versus 40% for Biden or another Democrat—there may be a pause in the “Trump Trade” as the market reassesses the electoral landscape.