The stock market is set to open tomorrow amid reports that President Joe Biden has decided not to seek reelection, which is likely to induce significant volatility.
In the wake of this announcement, questions arise regarding how Disney plans to transition after Bob Iger’s departure, with a Morgan Stanley executive leading the search for his successor.
This political development is anticipated to spotlight economic uncertainty, particularly as Democrats work to rally support for a new candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, commented, “If President Biden were to announce his withdrawal from the reelection race, the immediate market reaction would likely be one of volatility and uncertainty. Investors generally prefer stability and predictability, and such a significant political shift would disrupt both.”
Investors might gravitate toward safe-haven assets, such as gold, silver, and the Swiss franc, which typically offer more stability during periods of political and economic unrest.
Additionally, this announcement could lead to a slowdown of the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s recent debate performance and assassination attempt.
The “Trump Trade” describes market behaviors influenced by the prospect of a second Trump administration. Trump, known for his business-friendly policies during his presidency, could significantly impact sectors like healthcare, banking, cryptocurrency, and oil, along with companies such as Tesla and Trump Media and Technology Group if he were to return to office.
Ed Mills, a Washington policy analyst at Raymond James, noted in a recent communication with CNBC that while Biden’s exit from the race may stall the current “Trump trade,” the firm’s electoral odds remain unchanged at 60% for Trump versus 40% for Biden or another Democrat.