The stock market is set to experience significant volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This development comes as Democrats rush to rally behind a potential new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
Experts predict that Biden’s decision will heighten economic uncertainty. Josh Thompson, CEO of Impact Health USA, noted that such a substantial political shift would likely lead to instability in the markets. “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” he mentioned. Investors typically favor stability, and this unexpected change could disrupt that.
In response to the anticipated instability, investors might turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more resilient during times of political and economic turmoil.
Additionally, this situation could lead to a slowdown in what has been termed the “Trump Trade.” This term describes market movements related to investor sentiments about a potential second Trump administration. Former President Donald Trump, who has significantly affected market behavior since outperforming Biden in a debate and surviving an assassination attempt, is seen as favorable for business interests. Key sectors expected to benefit from another Trump presidency include healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills indicated that while there may be temporary fluctuations in the “Trump trade,” he does not foresee a dramatic overall market reaction. He maintained the electoral odds at 60% for Trump versus 40% for a Democratic candidate.