The stock market is set to react tomorrow to the announcement that President Joe Biden will not be seeking reelection, with significant volatility expected.
A recent study indicates that California’s implementation of a $20 minimum wage for fast food workers did not lead to job losses, suggesting that the economic landscape is shifting as Democrats scramble to rally behind a new candidate. Biden has already endorsed Vice President Kamala Harris as a potential nominee.
Market experts, including Josh Thompson, CEO of Impact Health USA, noted that if Biden officially withdraws from the race, the market will likely experience immediate volatility and uncertainty. Investors typically favor stability, and a major political change like this could disrupt market confidence.
In light of this uncertainty, investors might turn to safer assets, such as gold, silver, and the Swiss franc, which tend to perform better during times of political and economic instability.
Additionally, a pause in the so-called “Trump Trade” could occur. This term describes the market’s behavior in response to the prospect of another Trump administration, particularly following Donald Trump’s notable debate performance against Biden and his survival of an assassination attempt. Under Trump’s presidency, certain sectors, including healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group, are seen as potential beneficiaries.
Ed Mills, a Washington policy analyst at Raymond James, noted that even if Biden exits the race, the electoral odds would remain at 60% for Trump compared to 40% for a Biden/Democratic candidate. While a re-evaluation of the “Trump Trade” might happen, he does not anticipate a widespread market response.