The stock market is expected to experience heightened volatility tomorrow following the announcement that President Joe Biden will not seek reelection. This decision brings economic uncertainty to the forefront, particularly as Democrats scramble to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as his successor.
Josh Thompson, CEO of Impact Health USA, suggested that Biden’s withdrawal could lead to an immediate market reaction characterized by volatility and uncertainty. Investors typically favor stability and predictability, and this significant political change could disrupt both.
In response to this uncertainty, investors may gravitate towards safe-haven assets such as gold, silver, and the Swiss franc, which tend to be more stable during times of political and economic turmoil.
Another potential impact is a slowdown in the “Trump Trade,” which has been gaining traction since former President Donald Trump surpassed Biden in a recent debate and also survived an assassination attempt. The Trump Trade refers to market behavior influenced by the likelihood of a second Trump administration. Trump’s first presidency was marked by business-friendly policies, making sectors like healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla and Trump Media and Technology Group potential beneficiaries of his return.
Raymond James policy analyst Ed Mills noted that even if Biden exits the race, their electoral odds would likely remain unchanged at 60% for Trump versus 40% for Biden or another Democrat. While there may be a temporary slowdown in the “Trump Trade” as the market reassesses the political landscape, Mills does not anticipate a significant broader market reaction.