Shake up in presidential race leaves Wall Street with many questions
Nasdaq rallies ~1.5%, S&P 500 up ~1%, Dow rises modestly
Tech leads S&P 500 sector gainers; Energy weakest group
Dollar, bitcoin edge up; gold, crude slip
U.S. 10-Year Treasury yield edges up to ~4.26%
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SHAKE UP IN PRESIDENTIAL RACE LEAVES WALL STREET WITH MANY QUESTIONS
U.S. equities were higher on Monday with markets appearing to react positively toU.S President Joe Biden's exit from the election campaign and his endorsement of Vice President Kamala Harris to be his party's candidate for the White House.
But even though Democrats had been urging Biden to make this decision for weeks, Wall Street commentators reacted cautiously and pointed out many unknowns ahead.Here's a few reactions.
Mark Malek, CIO at Siebert Financial, is awaiting polling data, and clarity on policies Democrats will now campaign on although he's inclined to assume Harris would pursue policies similar to Biden's.
"All in all, it is too early to tell how this latest news will impact markets in the future. In this temporary vacuum, we must assume a base case of the prevailing “Trump trade” versus 4 more years of current policy," Malek wrote.
At Glenmede, strategists Jason Pride and Michael Reynolds say Biden's replacement may have a similar focus but "there may be differences in key details that investors will want to stay attuned to regarding issues like taxes, trade and immigration."
Even in "normal" election years (if there is such a thing) they point out that volatility rises with the CBOE Volatility Index .VIX increasing 40% on average in the 50 days before Election Day going back to 1990. But given the extra uncertainty of a major party nominee being replaced late, "expectations for volatility may be even greater than normal," they said.
At Wells Fargo, Michael Pugliese and Aubrey George say that the dust needs to settle before polls can capture voter sentiment. So they cautioned "against jumping to conclusions" and made no major changes to their economic forecasts.
But then Jay Woods, chief global strategist at Freedom Capital Markets, wrote that the market's real drivers are still the same, even though all eyes may be glued to the election campaign's "moment to moment" changes.
"At the end of the day, it is the Fed and fiscal policy that will drive the markets. The market doesn’t care about your politics," Woods said.
(Sinéad Carew)
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FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
A QUICK CHAT ABOUT THE GROWTH OF AI - CLICK HERE
MORE UNCERTAINTY FOR BIOTECHS AS BIDEN BOWS OUT - CLICK HERE
NASDAQ, S&P 500 GAIN WITH U.S. POLITICS IN FOCUS - CLICK HERE
NASDAQ COMPOSITE: INTERNAL MEASURE HITS HURDLE, NOW WHAT? - CLICK HERE
SMALL CAPS COULD KEEP GOING - CLICK HERE
ARE THE DAYS NUMBERED FOR JULY'S ROTATION TRADE? - CLICK HERE
WHY A SOFT DOLLAR POLICY IS DIFFICULT - DEUTSCHE BANK - CLICK HERE
STOXX AT THE OPEN: AIRLINES GROUNDED, TECH UP - CLICK HERE
EUROPEAN STOCK FUTURES RISE, SHAKE OFF BIDEN - CLICK HERE
WALL STREET IN MEASURED MOOD AS BIDEN BOWS OUT - CLICK HERE
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