Investors are bracing themselves for potential market turbulence following concerns over President Joe Biden's viability in the upcoming election. The uncertainty surrounding the Democratic ticket has raised fears of an unknown candidate stepping in, which could lead to volatility and instability in the market.

According to 22V Research's Kim Wallace, President Biden's recent prime-time debate stumble has made it difficult to ignore the perception that he may no longer be a viable contender. This has left Democrats facing a contentious path forward, as pressures from mega-donors and members of Congress mount. It remains unclear how smoothly the party will navigate this situation, but there is consensus that work needs to be done to address potential outcomes.

For investors who have witnessed a 15% surge in the S&P 500 this year, AGF Investments' Greg Valliere warns that a new candidate on the Democratic ticket could signal increased market volatility. The market, currently in a rally mode, could face a period of uncertainty and instability.

Several potential candidates have been mentioned by sources, including California Governor Gavin Newsom, Michigan Governor Gretchen Whitmer, Pennsylvania Governor Josh Shapiro, Commerce Secretary Gina Raimondo, and former Secretary of State Hillary Clinton. Market analysts, such as Steve Pavlick from Renaissance Macro, suggest that Vice President Kamala Harris and Commerce Secretary Gina Raimondo may be viewed favorably by a nervous market. Pavlick argues that Harris could be seen as a continuation of Biden's policies, offering clarity from a policy perspective. On the other hand, Raimondo's involvement in key Biden legislation and positive perception among businesses make her an attractive choice.

Nevertheless, regardless of whether President Biden steps aside or not, investors should prepare for a bumpy ride in the coming months. Political uncertainty, especially the potential entrance of another Democratic candidate, typically leads to heightened market volatility. Marvin Loh, State Street's senior global macro strategist, explains that this uncertainty is likely to drive term premium in the Treasury market. The increased return that investors expect for holding longer-term bonds could be affected by sector-specific volatility based on individual candidate policies.

Keith Lerner, co-chief investment officer at Truist, highlights that volatility tends to spike in October as investor anxiety and uncertainty build up. However, historically, volatility recedes once there is clarity on the election winner, regardless of the outcome.

It is essential for investors to reevaluate and adjust their investment portfolios to manage risk appropriately amid this uncertain political landscape. While there are concerns, Goldman Sachs Asset Management portfolio manager Brook Dane assures investors that the AI trade remains a viable option, unaffected by the fresh uncertainty brought by the presidential race.

As Election Day draws nearer, market participants will closely monitor developments in the presidential race and adjust their strategies accordingly. Volatility is expected, but investors remain hopeful that clarity will prevail once the winner is determined.