The stock market is set to open tomorrow amid significant news that President Joe Biden will not seek reelection, leading to anticipated volatility.
Tech stocks like Nvidia and Apple may experience a boost from potential Federal Reserve rate cuts, according to analysts. This political development is expected to heighten economic uncertainty as Democrats hurry to rally around a new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, expressed that should Biden announce his withdrawal, the market’s immediate response would likely involve heightened volatility and uncertainty. Investors typically favor stability, and such a major political change could disrupt that equilibrium.
This uncertainty may lead investors to seek refuge in safer assets such as gold, silver, and the Swiss franc, which tend to be more stable in times of political and economic turmoil.
Additionally, the market may experience a pause in the so-called “Trump Trade,” which has gained momentum since former President Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt. The “Trump Trade” reflects investor behavior in anticipation of a potential second Trump administration, as he was considered favorable to business interests during his presidency, with particular benefits projected for sectors including healthcare, banking, cryptocurrency, oil stocks, and companies like Tesla, as well as Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted that while Biden’s exit from the race could stall the momentum of the “Trump Trade,” they do not foresee a significant broader market impact, maintaining electoral odds at 60% for Trump against 40% for the Democratic nominee.