The stock market will open tomorrow to the news that President Joe Biden will not be running for reelection, sparking anticipated volatility.
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President Biden’s decision brings economic uncertainty to the forefront as Democrats rally behind a new candidate, with Biden endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, told Yahoo Finance over the weekend, “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 could drive investors toward safe-haven assets like gold, silver, and the Swiss franc, which are less affected by political and economic instability.
Another possibility is a slowdown in the “Trump Trade,” which has gained momentum since former President and Republican presidential nominee Donald Trump outperformed Biden in a debate and survived an assassination attempt. The Trump Trade refers to market behaviors in response to the potential of a second Trump administration. Beneficiaries of a Trump presidency include healthcare, bank, cryptocurrency, oil stocks, Tesla, and Trump Media and Technology Group.
Raymond James Washington policy analyst Ed Mills stated in a note shared with CNBC last week, “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.”