Tomorrow’s stock market will likely experience significant volatility upon the announcement that President Joe Biden will not seek reelection. This political shift may introduce a wave of economic uncertainty as the Democratic Party scrambles to rally support around a potential new candidate, with Vice President Kamala Harris being endorsed by Biden.
Experts, such as Josh Thompson, CEO of Impact Health USA, anticipate that the market will react swiftly, with investors exhibiting caution. “If President Biden were to announce his withdrawal, the immediate market reaction would likely be one of volatility and uncertainty,” Thompson explained. Investors tend to favor stability, and a sudden political change could disrupt the market’s equilibrium.
In response to this uncertainty, investors might seek refuge in safer assets like gold, silver, and the Swiss franc—traditionally viewed as resilient during times of political and economic turbulence.
Moreover, the popular “Trump Trade,” which has gained traction as former President Donald Trump performed well in debates and faced a recent assassination attempt, could experience a slowdown. This term refers to market behavior tied to the potential of Trump’s second presidential term, which investors generally believe would favor sectors such as healthcare, banking, cryptocurrency, and oil, including companies like Tesla and the Trump Media and Technology Group.
However, analysts like Ed Mills from Raymond James remain cautiously optimistic, suggesting that while market reassessment may occur, the overall impact may be contained. “Should Biden leave the race, we would not immediately change our electoral odds. We do not see a broader market reaction,” Mills noted.
In summary, while President Biden’s decision not to run again could incite immediate market volatility, experts believe the potential for long-term stability exists as the political landscape evolves. This situation underscores the dynamic nature of the stock market and its dependence on political developments. Despite current uncertainties, there remains hope for a balanced recovery as new candidates emerge.