US stocks rose on Monday with tech leading the gains as investors assessed the potential fallout from President Joe Biden’s exit from the presidential race.
The S&P 500 (^GSPC) gained as much as 1% while the tech-heavy Nasdaq Composite (^IXIC) rose roughly 1.3%, both coming off their worst weekly losses since April. The Dow Jones Industrial Average (^DJI) rosed 0.4% in the wake of the index’s own sharp fall on Friday.
Chip heavyweight Nvidia (NVDA) led a broad-based tech rebound following heavy losses last week as investors rotated out of big-cap names.
Investors are surveying a changed political landscape after Biden called off his reelection bid on Sunday and backed his vice president, Kamala Harris, to replace him as the Democratic nominee. The political shock could inject more volatility into an already battered stock market, distracting focus from this week’s flood of earnings and key inflation release.
Biden’s move, while not unexpected after weeks of pressure, is seen on Wall Street as eroding the odds of Republican contender Donald Trump securing a return to the White House. That could prompt a light unwinding of recent “Trump trade” bets on assets seen as benefiting from a second Trump presidency, such as bitcoin, bank stocks, and higher US bond yields. The yield on the benchmark 10-year Treasury (^TNX) slipped in Monday’s early hours.
Meanwhile, earnings season is about to kick into higher gear, with a stream of S&P 500 companies expected to report in a week headlined by Alphabet (GOOG), Tesla (TSLA), and Chipotle (CMG).
Those results will give insight into the economy and the consumer ahead of Thursday’s report on second-quarter GDP and Friday’s update on the Federal Reserve’s preferred inflation metric, the Personal Consumption Expenditures (PCE) index.
