The stock market is poised for a potentially volatile opening tomorrow as President Joe Biden has announced he will not seek reelection. This development is expected to raise questions about economic stability, prompting Democrats to rally around a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred nominee.
Josh Thompson, CEO of Impact Health USA, commented that the reaction from the stock market is likely to be marked by volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he stated in an interview with Yahoo Finance over the weekend.
As uncertainty looms, investors might turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, the market may see a pause in the so-called “Trump Trade,” which gained momentum after former President Donald Trump outperformed Biden in debates and survived an assassination attempt. This trade refers to the market’s behavior in anticipation of a potential second Trump administration, which is expected to favor sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst for Raymond James, noted that while Biden’s exit could momentarily stall the “Trump Trade,” he does not anticipate a significant shift in overall market dynamics. “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 indicated in a note to CNBC last week.