The stock market is set to experience volatility as news breaks that President Joe Biden will not seek reelection. This development raises concerns about economic stability as Democrats hurry to rally around a new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Experts suggest that the immediate market response is likely to be turbulent. Josh Thompson, CEO of Impact Health USA, noted that such a significant political change would disrupt investor preferences for stability and predictability. This uncertainty could drive investors towards safe-haven assets such as gold, silver, and the Swiss franc, as they tend to be less affected by political and economic fluctuations.
The situation may also impact the ongoing “Trump Trade,” which has seen increased traction following former President Donald Trump’s strong debate performance and a recent assassination attempt that he survived. The term describes how market behavior shifts in anticipation of a second Trump administration, which is seen as favorable for sectors like healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and Trump Media and Technology Group.
Raymond James policy analyst Ed Mills observed that while the departure of Biden from the race could lead to a reassessment of the electoral landscape, it would not drastically change the current odds of 60% for Trump and 40% for a Democratic contender. He does not anticipate a substantial market response but acknowledges the potential slowing of the “Trump Trade” as the market recalibrates.