The stock market is set to open tomorrow amidst the significant news that President Joe Biden will not seek reelection, which is expected to introduce considerable volatility.
As the political landscape shifts, the spotlight is on Disney and the search for a successor to CEO Bob Iger, which is being led by an executive from Morgan Stanley.
The President’s decision may heighten economic uncertainty, prompting Democrats to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, expressed to Yahoo Finance that an announcement of Biden’s withdrawal would likely result in a volatile market response. He noted that investors favor stability, and such a notable political change would disrupt that predictability.
This potential uncertainty may lead investors to turn to safe-haven assets like gold, silver, and the Swiss franc, which tend to be less influenced by political or economic turbulence.
Additionally, this shift might stall what has been termed the “Trump Trade,” a phenomenon that gained momentum following Donald Trump’s strong performance during a debate against Biden and a recent attempted assassination.
The “Trump Trade” describes how the market reacts to the prospect of Trump’s return to the presidency, which historically favored business interests during his tenure. Key sectors anticipated to benefit from a second Trump presidency include healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla, as well as the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, commented in a note to CNBC that while Biden’s exit would not immediately alter their electoral predictions of 60% for Trump versus 40% for Biden or Democrats, it could lead to a reassessment of the race and a slowdown in the “Trump trade”, without eliciting a significant broader market reaction.