The 2024 presidential race has taken a dramatic turn with President Joe Biden's decision to step down, leading to potential changes in market strategies known as the 'Trump trade'.

What Happened: Biden's withdrawal and endorsement of Vice President Kamala Harris have stirred speculation about the future of the "Trump trade," CNBC reported on Monday. This term refers to market strategies banking on stocks that would likely benefit from a potential return of former President Donald Trump to the White House.

Previously, markets had factored in another term for the Republican challenger, following Biden's concerning debate performance and an assassination attempt on Trump. However, Biden's withdrawal has introduced a new level of uncertainty into the election, causing traders to reassess their positions.

Michael Brown, a senior research strategist at Australia-based broker Pepperstone, predicts that the U.S. dollar would soften as the "Trump trade" unwinds. He added that Biden's exit has increased the prospect of a Democratic victory marginally.

Brown anticipates that stocks may decline in the short term, but views any drops as medium-term buying opportunities. This outlook is supported by the expectation that the Federal Reserve will cut rates, alongside resilient economic and earnings growth.

Charles Myers, founder and CEO of advisory firm Signum Global Policy, also added that the "Trump trade" is at risk in the short term, adding that Harris will give a befitting competition to Trump.

"I think that it's a bit too early for the markets to declare victory for Trump, and I think she's going to give him a real run for his money," Myers said.

Why It Matters: The decision, though not entirely unforeseen, has ignited the stock market. Recent polls had shown a widening lead for Trump over Biden, following a lackluster debate performance, a failed assassination attempt on Trump, and the Republican convention.

Renowned economist Mohamed El-Erian expressed that opinions are likely to vary on how the news will influence U.S. stock futures. Some may perceive this as an indication of greater policy uncertainty post the November elections, while others might believe that the markets have already factored in the news.

Meanwhile, a snap poll conducted shortly after Biden's announcement showed a majority of Americans approved of the decision. The survey showed that 71% percent of the Americans surveyed said they either strongly approved or somewhat approved of Biden's withdrawal.