The stock market is poised for a turbulent opening tomorrow following the news that President Joe Biden will not seek reelection, creating significant volatility.
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The announcement of Biden’s withdrawal introduces economic uncertainty as the Democratic Party rushes to unify behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, remarked to Yahoo Finance over the weekend that should Biden officially withdraw, the market would likely react with volatility and uncertainty. Investors typically favor stability, and such a major political development could disrupt that preference.
This situation may lead investors to seek refuge in safe-haven assets like gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic unrest.
Additionally, the ongoing “Trump Trade,” which gained traction following former President Donald Trump’s debate performance against Biden and his survival of an assassination attempt, could see a slowdown. The Trump Trade represents the market’s response to the potential of a second Trump administration, with certain sectors, including healthcare, banking, cryptocurrency, and oil stocks, along with Tesla and Trump Media and Technology Group expected to benefit.
Despite the potential for market reassessment, Raymond James Washington policy analyst Ed Mills indicated in a note to CNBC last week that they would maintain their electoral odds at 60% for Trump and 40% for Biden or another Democratic candidate, predicting only a temporary halt in the “Trump trade” rather than a major market shift.