The stock market is anticipated to experience volatility when it opens tomorrow in light of news that President Joe Biden will not seek reelection. This development is expected to bring economic uncertainty as Democrats rally around a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, highlighted that if Biden were to officially withdraw from the race, the immediate market reaction would likely be marked by volatility and uncertainty. Investors typically favor stability, and such a notable political shift could disrupt that.
This climate of uncertainty may lead investors to gravitate toward safe-haven assets, such as gold, silver, and the Swiss franc, which are generally more stable during times of political and economic shifts.
There is also the potential for a slowdown in the so-called “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade refers to market actions and investor strategies based on the possibility of a second Trump administration, which is believed to favor sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, noted that while there may be a pause in the recent Trump Trade as the market reassesses the situation, the overall electoral odds between Trump and Biden/Democrats are unlikely to change significantly.