The stock market is set to face potential volatility with the announcement that President Joe Biden will not seek reelection, a development that raises significant economic uncertainties. This news comes as Democrats quickly rally around a potential new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented on the implications of Biden’s decision, noting that investors typically prefer stability, and a major political change could disrupt that environment. He suggested that such uncertainty might lead investors to seek refuge in “safe-haven” assets, including gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Additionally, there is the possibility that momentum for the “Trump Trade” could slow down. This term refers to market behaviors influenced by the expectation of a second Trump administration following former President Donald Trump’s notable debate performance and a recent assassination attempt.
Market analysts believe that Trump’s presidency, marked by a favorable stance toward businesses, could benefit sectors such as healthcare, banking, cryptocurrency, oil, Tesla, and the Trump Media and Technology Group in a potential second term.
Ed Mills, a Washington policy analyst at Raymond James, indicated that a Biden exit from the race would not drastically alter electoral odds, currently estimated at 60% for Trump versus 40% for Biden or another Democrat. Mills suggested that while the “Trump Trade” may temporarily stall as the market reassess the political landscape, a broader market reaction is not expected.