Stock Markets React Strongly As U.S. Presidential Race Begins To Heat Up

Global markets opened Monday, July 22 on a positive note following the news that President Joe Biden will be dropping out of the 2024 U.S. presidential election, sending investors scattering across the market, with many pricing in a possible Trump victory in November. 

On Sunday, July 21, the incumbent president announced that he would be dropping out of the race and would be endorsing current Vice President Kamala Harris for the Democratic nomination instead. 

Market reaction to the news came on Monday, as most major U.S. indices rebounded strongly following an eventful weekend that started with a global tech outage on Friday, July 19. 

By early morning, the S&P 500 was up by 0.7%, while the tech-heavy Nasdaq composite rose 1.1%. Elsewhere, the Dow Jones Industrial Average was up 167 points, or around 0.4% by the opening bell at Eastern Standard Time. 

The upward trend continued well into the rest of the afternoon, with the S&P up by 1.1% halfway through the day, the Nasdaq gaining at least 1.68%, Dow Jones moving sideways at 0.33%. 

A similar reaction was witnessed in European markets. Halfway through Monday, Eastern Standard Time, the Euro Stoxx 600 had climbed 0.93% and the FTSE 100 Index had improved by 0.53%. 

Asian markets ended lower, falling off slightly halfway through the day, and ending the local trading day flat. Elsewhere, U.S. Treasuries climbed slightly, seeing an overall positive improvement in yields, while the foreign exchange market witnessed a modest reaction on the back of a heated U.S. presidential election. 

The U.S. dollar had a strong start to the day, although halfway through Monday, performance started softening against other major currencies. 

Big Tech Holds Steady 

The tech sector is steadily making a return following its weakest performance since April 2024. The third week of July witnessed tech stocks bouncing across the board, as investors shared criticism on over-hyped and overvalued tech mega-cap tech stocks. 

One company that’s currently in focus is global chipmaker and Wall Street sweetheart, Nvidia (NASDAQ: NVDA) with stocks rapidly changing hands on a recent stock split which helped to support the market. 

Elsewhere, Microsoft (NASDAQ: MSFT) is making up for losses from the previous week following a major tech outage that left millions of Microsoft-powered devices inoperable after an update launched by Crowdstrike (NASDAQ: CRWD) contained faulty code. 

The mistake, which Crowdstrike explains was due to an internal error and not related to any sort of malicious cybersecurity threats left millions of businesses across the world offline for several hours. Hospitals, grocery stores, and airports were among those affected the most, with more than 3,000 canceled and over 11,000 delayed due to the outage. 

MSFT suffered heavily, as news of the incident broke before the market opened on Friday, with company stocks losing 2.19% since the previous day’s close. Similarly, CRWD was down a robust 14% during the same period and has yet to see any recovery from the losses. 

Though the sideways movement of mega-cap tech stocks has left performance flat, amid the earnings season, investors are starting to kick off what some experts claim could become a market rotation, whereby more investor interest is being focused on small and medium-cap stocks instead. 

Can Trump Make American Stocks Great Again? 

Political pressure on both sides of the aisle is leaving investors with a bearish sentiment, with many pricing in a potential Trump victory on the books in November. 

Wall Street has already started reacting to the former President’s trade talks, with analysts claiming that his tariff-heavy agenda could further intensify the country’s already sticky inflation problem. 

Investors have started dumping green stocks on the possibility of another Trump presidency, with much of his agenda focused on phasing out Biden-era green energy policies. 

Instead, Wall Street is focused on those policies that could further balloon the U.S. deficit, and potentially offset another monetary tightening that could leave markets shaky and CD rates over time to build more steam. 

Against the backdrop of Trump possibly taking the top job, U.S. Treasury prices were down, with yields rising, something which happens in anticipation of higher-for-longer inflation and interest rates. 

Final Thoughts 

Global markets remain sensitive to political influence. With the U.S. presidential election less than four months away, Wall Street investors are looking to bring more balance by holding onto investments that could survive both a Democratic and Republican-led government. 

Though the reaction on the market following President Biden’s announcement on Sunday had a somewhat positive effect on the market, this could help investors to a new position in the coming months as the presidential race begins to heat up.