Tomorrow, the stock market is set to react to the announcement that President Joe Biden will not seek reelection, which is likely to lead to significant volatility.
Biden’s decision is anticipated to introduce economic uncertainty as Democrats quickly unify behind a potential new candidate, with Biden endorsing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, remarked that if President Biden were to confirm his withdrawal from the race, the market would likely face immediate turbulence. He noted that investors tend to favor stability and predictability, and such a drastic political change could disturb both.
This uncertainty may drive investors toward “safe-haven” assets, including gold, silver, and the Swiss franc, which are generally less affected by political and economic turmoil.
Additionally, there could be a slowdown in what is referred to as the “Trump Trade,” which has gained traction following Donald Trump’s strong performance in debates and the recent assassination attempt against him. The “Trump Trade” reflects market behavior influenced by the prospect of a second Trump administration, with expectations that healthcare, banking, cryptocurrency, oil stocks, as well as companies like Tesla and the Trump Media and Technology Group, would benefit.
Ed Mills, a policy analyst at Raymond James, indicated that while Biden’s departure from the race could lead to a reassessment of the electoral odds—currently estimated at 60% for Trump and 40% for Biden/Democrats—he does not foresee a comprehensive market impact.