The stock market is set to experience volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development is likely to heighten economic uncertainty as Democrats work to consolidate support behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that the market would likely react with volatility and unease to Biden’s withdrawal. He noted that investors typically favor stability, and such a major political change could disrupt that stability.
In response to this uncertainty, investors might gravitate towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to perform better during political and economic upheaval.
Additionally, the so-called “Trump Trade,” which has gained momentum since Donald Trump, the former president and current Republican nominee, has been in the spotlight, might face a slowdown. This trading strategy reflects the market’s reaction to the prospect of a second Trump administration; Trump’s business-friendly policies as a president previously benefited various sectors, including healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, mentioned that while a clear shift in electoral odds might not occur immediately—currently estimated at 60% for Trump and 40% for Biden or another Democrat—there may be a pause in the “Trump Trade” as investors reevaluate the political landscape.