The stock market is set to experience notable fluctuations with the announcement that President Joe Biden will not seek reelection. This decision brings economic uncertainty to the forefront, as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the potential market impact, stating, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors might gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, there is speculation about a possible slowdown in the “Trump Trade,” which has gained momentum following the former president’s strong debate performances against Biden and his recent survival of an assassination attempt. The Trump Trade reflects market behaviors based on the prospect of a second Trump administration, which is anticipated to benefit sectors such as healthcare, banking, cryptocurrency, and oil, alongside companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills shared insights, stating, “Should Biden leave the race, 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.”