Wall St set for higher open as investors assess U.S. election after Biden exit
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Megacaps, Trump-linked stocks rise
Nvidia jumps on report of new AI chip for China market
Verizon falls on Q2 revenue miss
CrowdStrike slips after Friday's global cyber outage
Futures up: Dow 0.21%, S&P 500 0.67%, Nasdaq 1.07%
Updated at 8:34 a.m. ET/1234 GMT
By Ankika Biswas, Shubham Batra and Lisa Pauline Mattackal
July 22 (Reuters) - Wall Street was poised to open higher onMonday as investors weighed the odds ofa second term for Republican nominee DonaldTrump in the November electionafter President Joe Biden withdrew from therace and endorsed Kamala Harris's candidature.
Megacap stocks rose in premarket trading, with most U.S. Treasury yields including the benchmark 10-year bond yield US10YT=RR edging lower after Biden's announcement. Meta Platforms META.O, Alphabet GOOGL.O, Amazon.com AMZN.O and Apple AAPL.O gained more than 1% each.
At 8:34 a.m. ET, Dow e-minis 1YMcv1 were up 85 points, or 0.21%, S&P 500 e-minis EScv1 were up 37 points, or 0.67%, and Nasdaq 100 e-minis NQcv1 were up 210 points, or 1.07%.
Biden's exit on Sunday couldprompt investors to unwind trades on betsthat a Republican victory would increase U.S. fiscal and inflationary pressures. But someanalysts also saidmarkets could benefit from an increased chance of a divided government under the next administration.
Trump-linked stocks such as Trump Media & Technology Group DJT.O and software firm Phunware PHUN.O rose 0.4% and 1.4%, respectively.
"There might be a bit of an unwind of the pro-cyclical pro-small-cap trade we've seen if the odds of the race narrow a little bit," said Ross Mayfield, investment strategy analyst at Baird. "But the rotation in the market has been more driven by disinflation and the potential for rate cuts and a soft landing, than anything political."
Wall Street's "fear gauge" .VIX edged lower, but remained at a three-month high, reflecting mounting investor unease.
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 now on everyone's minds.
Focus will also turn to crucial data through 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 central bank's monetary policy trajectory.
The combination of results and economic data will be a key test for Wall Street after a three-day sell-off that saw the Nasdaq and the S&P 500 log 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 rose0.5% 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.Nfell 4% after it missedsecond-quarter revenue expectations.
Cybersecurity firm CrowdStrike CRWD.O lost4.5% and was on track to extend losses after a software update from the company sparked Friday's global tech outage, grounding flights, forcing broadcasters off air and leaving customers unable to access 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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