The stock market is set to open tomorrow amidst the significant news that President Joe Biden has decided not to seek reelection, which is expected to lead to increased volatility.
Analysts highlight that companies like Starbucks and Home Depot indicate consumers are reaching their limits, reflecting broader economic challenges. The political landscape is shifting as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Market strategist Josh Thompson, CEO of Impact Health USA, noted that Biden’s withdrawal from the race would likely trigger immediate market volatility and uncertainty. Investors typically favor stability, and such a drastic political change could disrupt that.
This uncertainty might drive investors towards safer assets, including gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic unrest.
Additionally, analysts speculate that the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in debates and endured an assassination attempt, may stagnate. This term describes the market trends and investor behaviors reacting to the possibility of a second Trump administration. During his presidency, Trump was seen as favorable to business interests, particularly benefiting healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Ed Mills, a policy analyst at Raymond James, mentioned that while Biden’s exit from the election wouldn’t immediately alter electoral odds—currently estimated at 60% for Trump versus 40% for Biden or another Democrat—a pause in the “Trump trade” could occur as the market reevaluates the political race. However, he does not anticipate a widespread market reaction.