The stock market is set to react to the news that President Joe Biden will not seek reelection, leading to expected volatility. With Democrats scrambling to rally behind a new candidate, endorsed by Biden as Vice President Kamala Harris, economic uncertainty is likely to rise.
Josh Thompson, CEO of Impact Health USA, commented that if Biden officially announces his withdrawal, the market response will probably be characterized by volatility and uncertainty. He noted that investors tend to favor stability, and such a significant political change would disrupt that.
This uncertainty may lead investors to seek refuge in safe-haven assets like gold, silver, and the Swiss franc, which are known to be less influenced by political and economic instability.
Additionally, this development could impact the “Trump Trade,” which has gained momentum following former President Donald Trump’s debate performance and recent events surrounding him. The Trump Trade reflects market behaviors linked to the potential of a second Trump presidency, which is perceived to be beneficial for sectors such as healthcare, banking, cryptocurrency, and oil, alongside companies like Tesla and Trump Media and Technology Group.
Analyst Ed Mills from Raymond James suggested that while Biden’s exit from the race might cause a pause in the recent Trump trade, it would not necessarily lead to a significant market shift, maintaining current electoral odds at 60% for Trump versus 40% for Biden or another Democrat.