The stock market is expected to experience volatility when it opens tomorrow, following the announcement that President Joe Biden will not seek reelection. This decision introduces a wave of economic uncertainty as Democratic leaders quickly rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the role.
Market analysts predict that this political shift will likely lead to an immediate reaction characterized by instability. Josh Thompson, CEO of Impact Health USA, explained that investors typically favor stability, and such significant changes in the political landscape could disrupt that.
In response to this uncertainty, investors might increasingly turn to safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, there may be a pause in what is known as the “Trump Trade,” which has gained traction since former President Donald Trump outperformed Biden during a debate and survived a high-profile assassination attempt. The “Trump Trade” describes how the market reacts and adapts based on the prospect of a second Trump administration, which tends to favor stocks in sectors like healthcare, banking, cryptocurrency, oil, Tesla, and the Trump Media and Technology Group.
Despite the significant changes, some analysts believe the overall market response may not be drastic. Ed Mills, a Washington policy analyst at Raymond James, stated that while there could be a reassessment of the market in light of Biden’s exit, they do not anticipate a dramatic shift in their electoral odds, maintaining a projected 60% likelihood for Trump versus 40% for Biden or a Democratic candidate.