The stock market is poised for significant changes as news emerges that President Joe Biden will not seek reelection, a move that is likely to stir volatility in the markets. This development comes as economic uncertainty takes center stage, with Democrats quickly rallying around a new candidate, likely endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, predicted that if Biden officially announces his withdrawal, it would trigger immediate market fluctuations marked by uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he noted.
This uncertainty could lead investors to flock to safe-haven assets such as gold, silver, and the Swiss franc, which typically perform better in times of political and economic instability.
Additionally, the market’s so-called “Trump Trade,” which has gained momentum since Donald Trump’s strong debate performance and a recent assassination attempt, might stall. This term refers to the trading patterns that investors adopt based on the potential of a second Trump administration, as Trump was viewed as pro-business during his presidency. Key sectors that could benefit from a second Trump term include healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while market reactions might waver, he does not anticipate a drastic shift in electoral odds—currently assessed at 60% for Trump versus 40% for Biden or another Democratic candidate. He remarked that the market may reassess its stance on the Trump trade, but significant broader market impacts are not expected.