President Biden’s exit from the presidential race and his endorsement of Vice President Kamala Harris as the Democratic party’s candidate has sent shockwaves through the financial markets. Investors and economists are now reassessing the impact of this decision on everything from the stock market to the so-called “Trump trade.”
U.S. markets initially reacted positively to Biden’s announcement, with the S&P 500 index and the Nasdaq both rising in Monday trading. However, investors are cautious about potential volatility in the near-term, especially if the race tightens with a new Democratic candidate.
Former President Trump had been leading in the polls prior to Biden’s decision, sparking the “Trump trade” strategy among investors. This strategy involves investing in assets and stocks believed to benefit under a Republican White House. However, with Harris now in the spotlight, Wall Street is reevaluating its approach and examining her economic policies and views.
The uncertainty surrounding the new Democratic candidate has some investors concerned about potential downward pressure on the S&P 500, which has seen significant growth in the past year. Despite this, many investors are still focusing on key economic data and Federal Reserve rate-cut expectations as major drivers of financial market returns.
Harris’ economic views, including her support for green energy initiatives and scrutiny of big corporations, are under scrutiny by Wall Street. While she is expected to continue Biden’s policies in many areas, her stance on trade policy, particularly her opposition to trade deals like the USMCA and TPP, could have implications for the economy and markets.
Overall, the financial markets are bracing for a period of heightened uncertainty as the race for the presidency unfolds. Investors are advised to closely monitor economic data and policy developments to navigate the evolving landscape.
