The stock market is set to experience fluctuations when it opens tomorrow, fueled by the news that President Joe Biden will not seek reelection. This development is anticipated to inject a significant dose of volatility into the financial landscape.
The announcement brings economic uncertainties to the forefront as Democrats rally around a potential new candidate, with Biden endorsing Vice President Kamala Harris as the likely nominee.
Josh Thompson, CEO of Impact Health USA, commented on the potential market implications, stating that an announcement of Biden’s withdrawal would likely lead to “volatility and uncertainty.” Investors typically favor stability, and this major political shift could disrupt that environment.
In response to this uncertainty, investors may shift towards safe-haven assets such as gold, silver, and the Swiss franc, which are generally more resilient during periods of political and economic instability.
Additionally, the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performance and a recent assassination attempt against him, could see a slowdown. This trade describes how market behaviors are influenced by the prospect of a second Trump administration, which is viewed favorably by certain business interests.
Ed Mills, a Washington policy analyst at Raymond James, indicated that despite the potential for a stall in the Trump Trade as the market recalibrates, he does not foresee a drastic change in the broader market. He noted that the electoral odds would remain approximately 60% in favor of Trump compared to 40% for Biden or another Democrat.
Gavin contributed to this article.