The stock market is set to experience fluctuations following the announcement that President Joe Biden will not seek reelection. This decision is expected to heighten economic uncertainty as Democrats quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that such a significant political change would likely lead to immediate market volatility. “Investors generally prefer stability and predictability, and this announcement would disrupt both,” he stated in an interview over the weekend.
In light of the anticipated uncertainty, investors may gravitate towards safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
The market may also see a slowdown in the trend commonly referred to as the “Trump Trade,” which gained momentum following former President Donald Trump’s strong performance in recent debates and his survival of an assassination attempt.
The term “Trump Trade” describes the market activity influenced by the prospect of Trump’s return to the presidency, benefiting sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and his own Trump Media and Technology Group.
Despite these shifts, Raymond James Washington policy analyst Ed Mills indicated in a note to CNBC that they would not revise their electoral odds just yet, stating a current assessment of 60% in favor of Trump versus 40% for Biden or another Democratic contender. He noted that while the “Trump Trade” might stall as the market reassesses the political landscape, he does not foresee a significant overall market reaction.