The stock market is set to open tomorrow amid news that President Joe Biden will not seek reelection, a development likely to trigger significant volatility.
Nvidia’s stock is experiencing one of its most tumultuous weeks in recent memory.
This decision introduces new economic uncertainties as Democrats rush to rally behind a different candidate, with Biden endorsing Vice President Kamala Harris as his preferred nominee.
According to Josh Thompson, CEO of Impact Health USA, “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.”
This level of uncertainty might lead investors to flock to safer assets, such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turmoil.
Another potential outcome could be a halt in the so-called “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a debate and survived a recent assassination attempt.
The “Trump Trade” describes market behavior influenced by the prospect of a second Trump administration. During his presidency, Trump, a former real estate mogul with a mixed business record, was perceived as favorable to business interests. Stocks in sectors like healthcare, banking, cryptocurrency, oil, and companies like Tesla, as well as Trump Media and Technology Group, are anticipated to benefit from another Trump presidency.
Raymond James Washington policy analyst Ed Mills mentioned that if Biden departs from the race, they would not immediately alter their electoral odds, currently estimated at 60% for Trump and 40% for Biden or another Democrat. While there could be a slowdown in the recent “Trump trade” as the market reevaluates, a significant overall market reaction is not expected.