Nasdaq stocks surge after Biden pulls out

U.S. stocks rose Monday as investors weighed the potential fallout from President Joe Biden’s withdrawal from the presidential race.

The S&P 500 Index (GSPC) gained about 0.7% while the tech-heavy Nasdaq Composite (IXIC) advanced more than 1%, both coming off their worst weekly losses since April. The Dow Jones Industrial Average (DJI) slipped just below the flat line following the index’s sharp decline Friday.

Investors are watching a shift in the political landscape after Biden dropped his reelection bid Sunday and endorsed his vice president, Kamala Harris, to replace him as the Democratic nominee. The political shock could inject more volatility into an already battered stock market, distracting from this week’s deluge of earnings and key inflation figures.

Biden’s move, while not unexpected after weeks of pressure, is seen on Wall Street as eroding Republican nominee Donald Trump’s chances of securing a return to the White House. It could prompt a slight unwinding of recent bets on “Trump trades” on assets seen as benefiting from a second Trump presidency, such as bitcoin, bank stocks and higher U.S. bond yields. The yield on the benchmark 10-year Treasury note (^TNX) fell in the early hours of Monday.

Meanwhile, earnings season is about to kick into high gear, with a slew of S&P 500 companies set to report results in a week, headlined by Alphabet (GOOGL, GOOG), Tesla (TSLA) and Chipotle (CMG).

The results will provide a snapshot of the economy and consumers ahead of Thursday’s second-quarter GDP report and Friday’s update on the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index.