President Joe Biden may decide to drop out of the presidential race, potentially taking advantage of a move toward a deal seen as a victory for Donald Trump. NBC News reported on Friday that Biden family members had discussed what a potential exit might look like, citing two people familiar with the matter. This could be at least a temporary curveball for Wall Street, which is increasingly confident Trump will return to the White House. “We would not immediately change our election odds (Trump 60% vs. Biden/Dems 40%) if Biden drops out of the race. We may see the recent ‘Trump trade’ as the market reevaluates the race stalled, but “we’re not going to see a broader Market Reaction. Stocks continued to rise after Biden’s troubled presidential debate last month. Some have pointed to the Trump factor as a reason for the recent stock market rally, although the increased likelihood of a rate cut by the Federal Reserve in September may also have played a role. .SPX 1Y Mountain stocks continued to climb over the summer, including after the June 27 debate. The potential shift in Democratic votes comes as Trump is seen as the favorite to win in November. As of Friday morning, traders at the PredictIt betting market were giving odds of a Republican victory of about 63%. The latest NBC News poll shows Trump’s approval rating is 3 percentage points higher than Biden’s nationally. If Biden is replaced on the ballot, Democrats will need to choose presidential and vice presidential candidates, which may not be determined until the party convention in August. “If a Democratic vote emerges that appears to tip the race toward a Democratic win and/or a sweep, we may see a market reaction — especially given the potential policy implications in 2025 of Trump-era tax cuts Expires in December 2025. However, we note that the policies of a potential Harris administration will be largely consistent with those of President Biden,” Mills said. Even if Trump is still seen as the favorite to win, changes at the top of the ballot could affect the race for the next ballot and control of Congress. “The Senate is currently controlled by Democrats 51-49, although the electoral map is very favorable to Republicans. If Trump wins in a Republican sweep (House and Senate), we suspect he will interpret it as “Make America Again” “Great” mandate to implement his “America First” policies,” TD Cowen analyst Chris Krueger said in a note Thursday. Overall, Wall Street sees a Trump victory as positive for stocks, given his calls for lower taxes and less regulation. Some areas of concern are green energy stocks and the impact of his proposed tariff hikes, which some economists predict could lead to higher inflation. “The main market trends on election night will be reflected through equities as there are significant differences in regulatory policy. After a Biden win, markets will maintain the status quo. After a Trump win, (stocks) will get some significant support, Jefferies chief market strategist David Zervos said in a note to clients on Friday.
