The stock market is expected to experience volatility when it opens tomorrow following the announcement that President Joe Biden will not seek reelection. This development brings economic uncertainty to the forefront as Democrats quickly rally behind a potential new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
According to Josh Thompson, CEO of Impact Health USA, the immediate market reaction to Biden’s withdrawal is likely to be marked by volatility and uncertainty. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
This uncertainty could lead investors to seek refuge in safe-haven assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, the market may see a slowdown in what’s referred to as the “Trump Trade,” a phenomenon that gained traction following former President Donald Trump’s strong debate performance and survival of an assassination attempt. The “Trump Trade” reflects investor behaviors and trading patterns in anticipation of a second Trump administration. During his presidency, Trump was known for his pro-business policies, which have made certain sectors like healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group potential beneficiaries of a return to his leadership.
Raymond James analyst Ed Mills noted that while Biden’s exit from the race would prompt a reassessment of electoral odds—currently at 60% for Trump and 40% for any Democratic alternative—he does not anticipate a significant broader market reaction at this time.