The stock market is set to open tomorrow amidst speculation that President Joe Biden will not seek reelection, likely resulting in increased volatility.
The potential decision introduces economic uncertainty, as Democrats scramble to rally behind a new candidate. Biden has endorsed Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that Biden’s withdrawal from the race would likely cause immediate market turmoil. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he said.
This uncertainty could drive investors towards safer assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic fluctuations.
Additionally, the ongoing “Trump Trade,” which has been gaining traction since former President Donald Trump’s strong debate performance and his recent survival of an assassination attempt, may stall. The term refers to market behaviors influenced by the prospect of a second Trump administration. Trump, known for his business-friendly policies during his presidency, could positively impact sectors like healthcare, banking, cryptocurrencies, oil, Tesla, and his own Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills, in a note shared with CNBC, stated that if Biden were to exit the race, they would not immediately adjust their electoral odds—60% for Trump versus 40% for Biden or another Democrat. He noted that while the “Trump trade” might encounter a slowdown as the market reassesses the political landscape, a broader market reaction is not anticipated.