Biden’s Withdrawal From Presidential Race Seemingly Welcomed By Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move to the upside following the mixed performance seen last week.

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.

With concerns about the outlook for tech stocks recently weighing on Wall Street, negative sentiment may have been generated by a major IT outage.

The operations of major banks, media outlets, hospitals and airlines worldwide were affected due to the widespread outage, which was purportedly caused by an update by cybersecurity firm CrowdStrike (NASDAQ:CRWD).

“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts,” the company’s CEO George Kurtz said on X. “Mac and Linux hosts are not impacted.”

“This is not a security incident or cyberattack,” he continued. “The issue has been identified, isolated and a fix has been deployed.”

Shares of CrowdStrike plunged by 11.1 percent, while shares of Microsoft (NASDAQ:MSFT) have also moved to the downside as many of the software giant’s users have also been impacted by the issue.

“The underlying cause has been fixed, however, residual impact is continuing to affect some Microsoft 365 apps and services. We’re conducting additional mitigations to provide relief,” Microsoft said on X.

Overall trading activity was somewhat subdued, however, with a lack of major U.S. economic keeping some traders on the sidelines.

Semiconductor stocks saw substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 3.1 percent to its lowest closing level in over a month.

A steep drop by the price of crude oil also contributed to significant weakness among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index falling by 1.4 percent and 1.2 percent, respectively.

Considerable weakness was also visible among computer hard stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Computer Hardware Index.

Gold, networking and tobacco stocks also saw notable weakness, while pharmaceutical stocks regained ground following Thursday’s sell-off.

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