The stock market is poised for upheaval as news emerges that President Joe Biden will not seek reelection. This development is expected to trigger significant volatility.
Nvidia’s stock is currently facing one of its most challenging weeks on record.
Biden’s exit from the race is likely to amplify economic uncertainty, compelling Democrats to unify behind a new candidate, with Biden endorsing Vice President Kamala Harris as his preferred successor.
Market expert Josh Thompson, CEO of Impact Health USA, remarked, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
In response to this uncertainty, investors could gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which are typically less sensitive to political and economic turmoil.
Moreover, this situation may hinder the momentum of the “Trump Trade,” which has seen increased activity following former President Donald Trump’s strong debate performances and a recent assassination attempt against him.
The “Trump Trade” encapsulates how market behaviors shift as investors react to the prospect of another Trump administration. Trump, known for his pro-business stance during his presidency, could notably benefit sectors such as healthcare, banking, cryptocurrency, and oil, as well as companies like Tesla and the Trump Media and Technology Group.
However, Ed Mills, a policy analyst at Raymond James, indicated in a note to CNBC, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”
Will Gavin played a role in the compilation of this article.