Futures gain as investors assess U.S. election after Biden withdrawal
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Megacaps, Trump-linked stocks rise in premarket trading
CrowdStrike slips after Friday's global cyber outage
Nvidia jumps on report of new AI chip for China market
Futures up: Dow 0.17%, S&P 500 0.52%, Nasdaq 0.84%
Updated at 7:08 a.m. ET/1108 GMT
By Ankika Biswas, Shubham Batra and Lisa Pauline Mattackal
July 22 (Reuters) -U.S. stock index futures rose onMonday as investors weighed the odds ofa second term for Republican nominee DonaldTrump in the November presidentialelection after President Joe Biden bowed out of the race and endorsed Kamala Harris's candidature.
Biden announced his withdrawalon Sunday and said he supported VicePresident Harris for the Democratic ticket.
Megacap stocks rose in premarket trading as investors assessed the likelihood of another Trump White House. Meta Platforms META.O, Alphabet GOOGL.O and Apple AAPL.O gained between 0.8% and 1.3%.
At 7:08 a.m. ET, Dow e-minis 1YMcv1 were up 70 points, or 0.17%, S&P 500 e-minis EScv1 were up 29 points, or 0.52%, and Nasdaq 100 e-minis NQcv1 were up 165 points, or 0.84%.
Shares of Trump-linked stocks such as Trump Media & Technology Group DJT.O and software firm Phunware PHUN.O edged 0.6% and 0.2% higher, respectively.
Biden's exit couldprompt 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 a divided government under the next administration.
"What had originally been looking to be a subdued start to a week dominated by corporate earnings, US Q2 advance GDP and monthly PCE deflators has been turned on its head," said Marc Ostwald, global strategist at ADM Investor Services International.
Most U.S. Treasury yields including the benchmark 10-year bondyieldUS10YT=RR, slipped after Biden's announcement, while Wall Street's "fear gauge" .VIX traded at three-month highs.
The uncertainty over the Democratic ticket is the latest upheaval in the election cycle and comes as investors brace for a bevy of keyquarterly earnings, includingfrom two of the so-called Magnificent Seven companies- Google parent Alphabet GOOGL.O and Tesla TSLA.O. The question of whether therecent rally intop-tier high-momentum stocks is tenable is on everyone's minds.
Focus will also turn to crucial data throughout the week, including the Personal Consumption Expenditures Price Index - the Federal Reserve's preferred inflation gauge - durable goods and second-quarter GDP for insight into the U.S. central bank's monetary policy trajectory.
The combination of results and economic data will be a key test for Wall Street after a three-session sell-off that saw the Nasdaq and the S&P 500 logging their steepest weekly declines since mid-April on Friday.
It will also test whether a rotation out of expensive tech stocks to underperforming sectors will continue. Futures tracking the small-cap Russell 2000 RTYcv1 rose 0.5% after the index .RUT posted its second straight weekly gain.
Traders have broadly priced in a 25-basis-point rate cut by September and two cuts by the year-end, according to LSEG andCME's FedWatch data.
Among single movers, Nvidia NVDA.O rose 1.8% after Reuters reported the AI chip leader wasworking on a version of its new flagship AI chips for the China market that would be compliant withcurrent U.S. export controls.
Verizon Communications VZ.N fell 2.5% after the company reported revenue below analysts' expectations, while Truist Financial TFC.N lost 1.7% after reporting a 33% drop in second-quarter profit.
Cybersecurity firm CrowdStrike CRWD.O lost3.5% after a software update from the company sparked a global tech outage on Friday that grounded flights, forced broadcasters off air and left customers without access to essential services.
Reporting by Shubham Batra Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Sherry Jacob-Phillips and Pooja Desai
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