The stock market is poised for a volatile opening tomorrow following the news that President Joe Biden has decided not to seek reelection. This announcement is expected to create significant economic uncertainty as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Market analysts anticipate that Biden’s withdrawal could trigger immediate fluctuations as investors react. Josh Thompson, CEO of Impact Health USA, stated that investors typically favor stability, and such a dramatic political change could disrupt that predictability. This uncertainty might lead investors to gravitate toward safer assets, such as gold, silver, and the Swiss franc, which tend to fare better during tumultuous times.
Additionally, the development could stall the so-called “Trump Trade,” a trend that gained traction after former President Donald Trump outperformed Biden in the debates and survived an assassination attempt. The Trump Trade refers to market activity reflecting investor behavior based on the prospect of another Trump administration, which traditionally has been seen as favorable for sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while Biden’s exit from the race might cause some reevaluation of the market, it is unlikely to lead to widespread market turmoil. He noted that the electoral odds would still favor Trump, estimating a 60% chance for Trump against a 40% chance for Biden or another Democrat.