The stock market is expected to experience volatility tomorrow following the news that President Joe Biden will not be running for reelection.
Adding to the market’s concerns, Eli Lilly’s weight loss drug, Zepbound, has been found to help reduce heart failure risks.
The decision by President Biden is likely to bring economic uncertainty as Democrats rush to support a new candidate, with Biden endorsing Vice President Kamala Harris.
“If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty,” Josh Thompson, CEO of Impact Health USA, told Yahoo Finance over the weekend. “Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
This uncertainty could drive investors towards safe-haven assets such as gold, silver, and the Swiss franc, which are less sensitive to political and economic instability.
Another potential impact is the stalling of the “Trump Trade,” which has been gaining momentum since former President and Republican presidential nominee Donald Trump outperformed Biden in a debate and survived an assassination attempt.
The Trump Trade refers to the market trends and investor behaviors in anticipation of a second Trump administration, with potential beneficiaries including healthcare, banking, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
“Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling of the recent ‘Trump trade’ as the market reassesses the race, but we do not foresee a broader market reaction,” Raymond James Washington policy analyst Ed Mills stated in a note shared with CNBC last week.
Will Gavin contributed to this article.