The stock market is poised for a turbulent opening tomorrow following the announcement that President Joe Biden will not seek reelection. This news is expected to increase market volatility.
In related developments, Disney is faced with the challenge of finding a successor for Bob Iger, and a Morgan Stanley executive has been appointed to lead the search for a replacement.
The potential withdrawal of Biden from the race could heighten economic uncertainty, as Democrats rally to back a new candidate, with Biden endorsing Vice President Kamala Harris as the nominee.
Josh Thompson, CEO of Impact Health USA, indicated that such a significant political change could lead to immediate market fluctuations. “Investors generally prefer stability and predictability, and this shift would disrupt both,” he shared with Yahoo Finance over the weekend.
Investors may gravitate towards safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic uncertainty. Additionally, the rise of the “Trump Trade” could stall, characterized by market trends influenced by expectations surrounding a potential second Trump presidency.
The term “Trump Trade” describes how investors respond to market behaviors tied to the possibility of another Trump administration. Despite his controversial past in business, Trump was seen as a pro-business president, beneficial to sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, commented that if Biden exits the race, they would maintain their electoral odds at 60% Trump versus 40% Biden or Democrat candidates. He noted that while there may be a pause in the recent “Trump trade” momentum, a broader market reaction was not anticipated.