The stock market is set to open tomorrow amid news that President Joe Biden will not seek reelection, leading to expected volatility.
Nvidia is currently experiencing one of its most turbulent weeks ever, a situation compounded by the unfolding political landscape. This development brings economic uncertainty to the forefront as Democrats urged to rally behind a new candidate, with Biden endorsing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, stated, “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.”
This uncertainty may drive investors towards safe-haven assets such as gold, silver, and the Swiss franc, which are typically less affected by political and economic instability.
Additionally, the “Trump Trade,” which has gained traction since former President Donald Trump’s strong debate performance and recent circumstances surrounding his safety, could see a slowdown. The Trump Trade refers to market reactions tied to the prospect of a second Trump presidency, which historically favored business interests, particularly in sectors like healthcare, banking, cryptocurrency, oil, and companies such as Tesla and Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, noted in a report shared with CNBC, “Should Biden leave the race, we would not immediately change our electoral odds (60% Trump vs. 40% Biden/Dem). We could see a stalling out of the recent ‘Trump trade’ as the market reassesses the race, but we do not see a broader market reaction.”
Will Gavin contributed to this article.