The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, which could lead to significant volatility.
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The potential announcement regarding President Biden would heighten economic uncertainty, especially as Democratic leaders look to support a new candidate, with Biden reportedly endorsing Vice President Kamala Harris as the preferred nominee.
Josh Thompson, CEO of Impact Health USA, commented on the implications of such a major political shift. “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,” he stated.
This uncertainty may lead investors to seek safe-haven assets such as gold, silver, and the Swiss franc, which tend to be less affected by political and economic turbulence.
Additionally, the so-called “Trump Trade,” which has been gaining traction since former President Donald Trump outperformed Biden in a debate and survived an assassination attempt, could stagnate. This trade reflects how investors react to the potential of a second Trump administration. Trump’s presidency was viewed favorably by many business interests, with sectors such as healthcare, banking, cryptocurrency, oil, and companies like Tesla and Trump Media and Technology Group expected to benefit from another term.
Ed Mills, a Washington policy analyst at Raymond James, noted that while Biden’s exit from the race could lead to reevaluation of the electoral odds—currently estimated at 60% for Trump versus 40% for Biden or another Democrat—a significant broader market reaction is not anticipated at this stage.