LDN - Business

Futures rise after Biden pulls out of presidential race

[July 22, 2024] (Reuters) - U.S. stock index futures climbed on Monday as investors assessed the chances of a win by candidate Donald Trump in the November elections after President Joe Biden opted out of the race.

Biden announced he was exiting the race on Sunday, and endorsed Vice President Kamala Harris for the Democratic ticket.

Megacap stocks were up premarket, with Meta Platforms, Alphabet and Apple up between 0.5% and 0.8%, boosting the Nasdaq and S&P 500 futures.

At 4:17 a.m. ET, Dow e-minis were up 54 points, or 0.13%, S&P 500 e-minis were up 18 points, or 0.32%, and Nasdaq 100 e-minis were up 102.5 points, or 0.52%.

Shares of Trump-linked stocks such as Trump Media & Technology Group and software firm Phunware rose 2.8% and 1.4%, respectively.

Most U.S. Treasury yields, including the 10-year one, were down as Biden ended his reelection campaign after pressure from fellow Democrats who lost faith in his mental acuity and ability to beat Trump.

Biden's exit from the presidential race could prompt investors to unwind trades betting that a Republican victory would increase U.S. fiscal and inflationary pressures, while some analysts said markets could benefit from an increased chance of divided government under the next administration.

"Donald Trump is still the solid favorite to win the presidential election, but betting markets suggest he has a slightly lower probability of beating Harris rather than Biden," said Paul Ashworth, chief North America economist at Capital Economics.

"Harris will have a real chance to sell herself to the American public in the second presidential debate, currently scheduled for Sept. 10, although the Trump campaign could withdraw, not wanting to go toe-to-toe with the ex-attorney."

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 12, 2024. REUTERS/Brendan McDermid/File Photo

Investors are bracing for high volatility this week, with a deluge of quarterly earnings on deck, including from two of the so-called Magnificent Seven - Google parent Alphabet and Tesla - to gauge the sustainability of the recent run-up in the top-tier high-momentum stocks.

Focus will also be on major data throughout the week including Personal Consumption Expenditures (PCE) price index data - the Federal Reserve's preferred inflation gauge, durable goods and second-quarter GDP for clues on the U.S. central bank's monetary policy trajectory.

Traders have broadly priced in a 25-basis-point rate cut by September and two cuts by the year-end, as per LSEG and CME's FedWatch data.

Both the Nasdaq and the S&P 500 logged their steepest weekly declines since mid-April, with investors rotating out of expensive tech stocks to underperforming areas in the market, helping the small-cap Russell 2000 index post its second straight weekly gain.

Among other single movers, Nvidia rose 1.3% after Reuters reported the AI chip leader is working on a version of its new flagship AI chips for the China market that would be compatible with current U.S. export controls.

Shares of Bank of America lost 1.5% after Berkshire Hathaway sold about 33.9 million shares of the lender for around $1.48 billion over multiple transactions last week.

(Reporting by Shubham Batra and Ankika Biswas in Bengaluru; Editing by Sherry Jacob-Phillips)

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