The stock market is set to experience volatility as President Joe Biden’s decision not to seek reelection has been announced. This development brings economic uncertainty to the forefront, with Democrats now rallying behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, noted that if Biden formally withdraws, market reactions are likely to be shaky. Investors typically prefer stability, and such a significant political shift could threaten that stability.
This uncertainty may lead investors to seek refuge in safe-haven assets like gold, silver, and the Swiss franc, which tend to be less affected by political and economic instability.
Additionally, there may be a pause in what is referred to as the “Trump Trade,” which has gained momentum since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade encapsulates how the market reacts based on the prospect of a second Trump administration, particularly benefiting sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Despite the tumultuous landscape, Raymond James analyst Ed Mills indicated that a withdrawal by Biden would not alter their electoral odds of 60% for Trump versus 40% for Biden or the Democrats. Mills suggested that while there may be a reevaluation of the market’s stance on the “Trump trade,” a significant market reaction seems unlikely.