President Joe Biden’s unexpected withdrawal from the presidential race has sent shockwaves through the political and financial world. With the Democratic party now scrambling to find a new nominee, experts are weighing in on how this decision could impact the economy, particularly the stock market.
The immediate reaction from several experts is that Biden’s exit will likely lead to increased market volatility. CEO of Impact Health USA, Josh Thompson, noted that investors prefer stability and predictability, and a significant political shift like this could disrupt both. This could result in a sharp decline in stock prices as investors seek to hedge against potential risks.
Michael Collins, founder and CEO of WinCap Financial, echoed this sentiment, stating that a Biden withdrawal would almost guarantee a win for Trump, leading to increased uncertainty and volatility in the market. Investors may react differently depending on who becomes the new frontrunner for the Democratic party and their perceived policies towards businesses and the economy.
However, some experts believe that Biden’s exit could actually benefit U.S. equities. Timothy Holland, CFA, and chief investment officer at Orion, suggested that Kamala Harris, Biden’s endorsed replacement, could be perceived as a weaker candidate against Trump. This could lead to a fiscal policy backdrop featuring the extension of the Trump Tax Cuts and incremental government spending, particularly on the military, which could stimulate the U.S. economy and push stock prices higher.
In terms of other investments, Peter Earle, senior economist at the American Institute for Economic Research, noted that uncertainty surrounding the new Democratic nominee could lead investors to seek out safe havens like gold and silver. Meanwhile, Stephanie Vaughan, co-founder of Veda, suggested that a Trump presidency would be more beneficial for the crypto market, potentially leading to a rally in the crypto markets.
Overall, Biden’s withdrawal from the race has created a sense of uncertainty in the financial markets, with experts divided on the potential impacts. As the Democratic party works to select a new nominee, investors will be closely watching how this decision plays out and adjusting their strategies accordingly.
