US stock indices rose on Monday following President Joe Biden’s announcement that he is withdrawing his re-election bid. The markets bounced back from heavy losses last week amid a rotation in major technology stocks. Here’s what’s happening in the stock market.
Futures rose, with Wall Street indices recovering from the previous week’s significant losses as rising expectations of interest rate cuts pushed investors away from heavyweight tech stocks and into sectors more sensitive to the economy.
The S&P 500 and the NASDAQ Composite lost nearly 2% and 3.7% respectively last week, marking their largest weekly losses since April. In contrast, the Dow Jones index gained nearly 0.7%.
Biden Officially Withdraws from Re-Election Race, Harris Emerges as Democratic Candidate
Biden’s withdrawal comes amid growing calls from party members and donors for him to step down due to concerns about his advanced age, mental health, and his ability to compete effectively against Republican Party nominee Donald Trump.
Biden, the 46th president, gave his full backing to Vice President Kamala Harris as his successor, though she has yet to be officially nominated by the Democratic Party, with a vote expected in August. Trump was chosen as the Republican presidential candidate the previous week.
CBS polling data from the previous week showed Trump outperforming Biden significantly. It also showed Trump with a small lead over Harris.
It remains to be seen what stance Kamala Harris will take if she is chosen as the presidential nominee. Trump has stated that his policies include broad import tariffs, limits on immigration, and a withdrawal from treaty commitments. As Trump’s poll results are likely to improve, markets have favored trades that seek to anticipate trade barriers.
Some polls indicate that Harris may perform better than Biden against Trump, and Democrats are expecting the next polls to reflect a Harris-backed rebound.
Technology Stocks Start to Post Profits
As political developments continue, attention this week is likely to focus on key second-quarter earnings from the technology sector, which are expected to provide further insights into the main drivers of this year’s tech rally, notably artificial intelligence.
With Tuesday’s results from big names such as Alphabet (GOOGL) and Tesla (TSLA), investors will be keen to learn more about how both companies plan to integrate artificial intelligence into their products. Additionally, Tesla will be in the spotlight for its slowing sales.
Results from other major companies such as Lockheed Martin (LMT), General Electric (GE), Texas Instruments (TXN), and Visa (V) will also be released this week.
Looking ahead to Monday, Verizon Communications (VZ) will be in focus.
China’s Rate Cut Barely Impacts Oil Prices
Crude oil prices were slightly lower on Monday as China’s unexpected interest rate cut, aimed at boosting the world’s second largest economy, had little impact on investor sentiment.
Concerns about sluggish demand in China, the world’s largest oil importer, weighed on the market, especially after the previous week’s weaker-than-expected second-quarter growth figures.
