The stock market is set to open tomorrow amid speculation that President Joe Biden will not seek reelection, which could lead to significant volatility.
This potential decision may heighten economic uncertainty as Democrats work to rally support behind another candidate, with Biden reportedly endorsing Vice President Kamala Harris for the nomination.
Josh Thompson, CEO of Impact Health USA, mentioned in a recent conversation with Yahoo Finance that the market would likely respond with volatility and uncertainty if Biden withdraws from the race. He emphasized that investors typically favor stability, and a major political change could disrupt that stability.
In light of such uncertainty, investors might turn to “safe-haven” assets like gold, silver, and the Swiss franc, which tend to perform better during times of political and economic instability.
The situation may also affect the so-called “Trump Trade,” which has gained momentum following former President Donald Trump’s strong debate performance against Biden and his survival of an assassination attempt. This trade reflects market behaviors and investor responses connected to the possibility of Trump’s return to the presidency, as he was seen as favorable to business interests during his term. Sectors likely to benefit from a potential second Trump administration include healthcare, banking, cryptocurrency, oil, and companies like Tesla, as well as Trump Media and Technology Group.
However, Raymond James Washington policy analyst Ed Mills noted that while the withdrawal of Biden could shift perceptions, he doesn’t anticipate a significant change in electoral odds or a broad market reaction, keeping it at 60% for Trump versus 40% for Biden or another Democratic candidate.