U.S. Stocks May See Early Strength As Biden Drops Out Of Presidential Race

Stocks are likely to move to the upside in early trading on Monday, with the major index futures pointing to a higher open for the markets following the mixed performance seen last week. The Nasdaq 100 futures are surging by 1.1 percent.

The upward momentum on Wall Street comes after President Joe Biden announced his decision to drop out of the presidential race and endorsed his Vice President Kamala Harris.

Biden has been under pressure to step aside after his disastrous debate performance raised questions about his fitness to serve another term as president.

While Republican nominee Donald Trump is seen as a more pro-business candidate, his return to the White House could also lead to increased trade tensions with China.

“The market appears to have welcomed Joe Biden’s withdrawal from the presidential race, given how futures prices imply a decent opening for Wall Street,” said Dan Coatsworth, investment analyst at AJ Bell.

“However, there is still a lot of uncertainty until the new Democratic candidate is confirmed,” he added. “That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington.”

Later in the week, focus is likely to shift to a report on personal income and spending in June, which includes readings on inflation said to be preferred by the Federal Reserve.

The data could have a significant impact on the outlook for interest rates, with the Fed currently widely expected to lower interest rates by a quarter point in September.

Stocks moved mostly lower during trading on Friday, with the Nasdaq and the S&P 500 extending the steep drop seen over the two previous sessions. The narrower Dow also moved to the downside, pulling back further off the record closing high set on Wednesday.

The major averages all finished the day firmly in negative territory. The Dow slumped 377.49 points or 0.9 percent to 40,287.53, the Nasdaq slid 144.28 points or 0.8 percent to 17,726.94 and the S&P 500 fell 39.59 points or 0.7 percent to 5,505.00.

For the week, the major averages turned in a mixed performance. The tech-heavy Nasdaq plunged by 3.7 percent and the S&P 500 tumbled by 2.0 percent, but the Dow climbed by 0.7 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index slumped by 1.2 percent, while China’s Shanghai Composite Index slid by 0.6 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the U.K.’s FTSE 100 Index has advanced by 0.8 percent, the French CAC 40 Index and the German DAX Index are up by 1.3 percent and 1.4 percent, respectively.

In commodities trading, crude oil futures are falling $0.51 to $79.62 a barrel after plunging $2.69 to $80.13 a barrel last Friday. Meanwhile, after plummeting $57.30 to $2,399.10 an ounce in the previous session, gold futures are inching up $0.70 to $2,399.80 an ounce.

On the currency front, the U.S. dollar is trading at 157.03 yen versus the 157.48 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0881 compared to last Friday’s $1.0882.

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