The stock market is set to open tomorrow amidst the announcement that President Joe Biden will not seek reelection, raising expectations of significant volatility.
A recent study indicates that California’s new $20 minimum wage for fast food workers has not resulted in job losses, adding to the economic conversation as Democrats quickly rally around a new candidate, with Biden endorsing Vice President Kamala Harris as the frontrunner for the nomination.
Experts suggest that the market is likely to react with volatility and uncertainty should Biden officially withdraw from the race. Josh Thompson, CEO of Impact Health USA, stated that investors typically favor stability and predictability, and such a major political change could disturb these preferences.
This uncertainty might lead investors to gravitate towards safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, there may be a slowdown in the “Trump Trade,” a market trend that has been gaining traction after former President Donald Trump outperformed Biden in debates and survived a recent assassination attempt. The Trump Trade reflects the market’s reaction to the potential of a Trump presidency, which is viewed favorably by investors in sectors such as healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while the recent ‘Trump trade’ could stall as the market reassesses its political landscape, they are not expecting a broader market reaction. Currently, their electoral odds are positioned at 60% for Trump against 40% for Biden or another Democrat candidate.