The stock market is bracing for potential volatility as news spreads that President Joe Biden is not seeking reelection. This development has raised concerns about economic uncertainty, prompting Democrats to rally around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented that an announcement from Biden about stepping back from the race would likely lead to increased market instability. He explained to Yahoo Finance that investors typically favor stability, and such a significant political change could disrupt that predictability.
In response to this uncertainty, investors may shift their focus towards safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be more resilient in times of political and economic upheaval.
Additionally, the ongoing “Trump Trade,” which has gained traction following former President Donald Trump’s strong debate performance and a recent assassination attempt, might experience a slowdown. This trade captures market behavior in anticipation of the potential implications of another Trump presidency. As a former real estate entrepreneur who fostered pro-business policies during his term, Trump’s return could significantly benefit sectors like healthcare, banking, cryptocurrency, oil stocks, as well as Tesla and Trump Media and Technology Group.
Raymond James’ Washington policy analyst Ed Mills stated that while Biden’s exit from the race could lead to a reassessment of market dynamics, they do not foresee immediate changes in electoral odds, estimating them at 60% for Trump versus 40% for Biden or another Democrat. Mills emphasized that despite the potential pause in the “Trump trade,” broader market reactions are not expected.