The stock market is set to experience volatility as news breaks that President Joe Biden will not seek reelection. This announcement is expected to create economic uncertainty as Democrats scramble to rally support behind a new candidate, with Biden endorsing Vice President Kamala Harris as a potential nominee.
Josh Thompson, CEO of Impact Health USA, commented that if Biden announces his withdrawal, the market reaction would likely be one of instability. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both,” he explained.
In light of this uncertainty, investors may pivot toward safer assets like gold, silver, and the Swiss franc, which are typically less influenced by political and economic turmoil.
Additionally, this situation may lead to a slowdown in what is termed the “Trump Trade,” which has gained traction following former President Donald Trump’s strong debate performance against Biden and an assassination attempt on his life. The Trump Trade reflects how the market responds to the prospects of a second Trump administration, benefiting sectors such as healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills noted that while Biden’s exit from the race may stall the Trump Trade as investors reassess the political landscape, he does not foresee a drastic broader market reaction.