Biden's potential resignation impacting stock market stability

A dozen or so Democrats from the U.S. Congress joined the group of party members on Friday calling on President Joe Biden to withdraw his candidacy in the presidential elections. Senators Martin Heinrich from California and Sherrod Brown from Ohio appealed. Their call was supported by a dozen or so members of the House of Representatives, including close associates of the former Speaker of the House, Nancy Pelosi—Jared Huffman and Zoe Lofgren from California.

The Democratic congressmen's statement stated that current public concerns about the president's age and fitness could jeopardize his election campaign. They mentioned that although these concerns might not be completely justified, they have grown after the last debate with Trump, and it seems unlikely that they will disappear anytime soon, NBC News reported. Biden, however, maintains his decision to compete with Donald Trump.

However, looking at what happened over the last few weeks, from Biden's loss in the debate on 27th June to the assassination attempt on Trump, Democrats, if they want to achieve anything in the next term, have no other choice.

It's not just about winning the presidency now; it's about the balance of power in politics. Like Trump, Biden had an advantage in the House of Representatives only during the first two years of his term. From the Democrats' point of view, it may be imperative to at least defend the majority in the Senate or to maintain some level of power to influence the decisions of the future president, who could be Trump.

Is Biden's potential resignation already priced into stocks? Are investors already certain?

It looks like Biden's resignation scenario is already priced into stocks. The stock market began to change on Thursday, 11th July, and the assassination attempt on Trump took place on Saturday, 13th July, so investors have had this factored in for many days.

Investors already know this, and Biden's withdrawal won't surprise them?

Exactly right! The scenario of Biden's withdrawal is considered basic by investors.

Can Democrats even dream of their candidate winning anymore?

It's not just about winning the presidency now; it's about the balance of power in politics. For example, Biden had an advantage in the House of Representatives only during the first two years of his term, similar to Trump. From the Democrats' point of view, it may be very important to at least defend the majority in the Senate, or simply to maintain some level of power to influence the decisions of the future president, who could be Trump.

On Thursday, July 11, inflation data in the United States was published, which amounted to 3%, slightly below expectations. After such information, the market was supposed to rise, but indices, especially Nasdaq, plummeted. However, small companies resisted the decline.

There is no visible fear in the market. The Advanced Decline Line (a key market breadth indicator that compares the number of advancing stocks to the number of declining stocks - editor's note) is rising. Additionally, the Whaley Breadth Thrust indicator (activates when, in a 5-session interval, the number of advancing stocks is at least three times higher than the number of declining stocks - editor's note) shows a very good outlook for the market. The 14 observations from the early 1960s indicated a 24% market increase over the next 12 months.

The only option to replace the Democratic candidate with another is to replace him with a candidate from the same team, which means, in effect, Vice President Kamala Harris. To put it mildly, she is not that charismatic a politician. Therefore, replacing her with someone else may mean the need to raise funds from scratch. This is difficult, if not impossible, as less than four months are left until the elections.