How a Kamala Harris candidacy could impact the stock market

For over a year, Wall Street has speculated that Joe Biden might lose enough of his mental faculties to be forced out of the 2024 presidential race.By early 2023, it was becoming clear to investors that Biden was unfit to lead the country, and even less suitable for a second term and focus more to Kamala Harris.

With Biden now out of the race, it’s not just a major political event but also a significant market and economic issue.

Markets hate uncertainty, and last week’s selloff following the Dow’s all-time high, was partly driven by uncertainty about who former President Donald Trump and JD Vance will be running against.

This uncertainty also led to fears on Wall Street that Biden might withdraw just before his just before his official nomination at next month’s Democratic National Convention and endorse his less competent vice president, Kamala Harris. Despite polls showing Harris with a chance to win the presidency, this scenario would further shake investor confidence.

Key questions and investor concerns for Kamala Harris

The next week promises to be very interesting. Key questions you’ll be hearing in the coming days include:

If Biden isn’t healthy enough to run for president, then how is he fit enough to be president?

Why isn’t he handing the White House keys to Harris, whom he claims is qualified to replace him?

Which Democrats are going to ask for an open convention to resolve this issue?

For investors, the situation is becoming increasingly complex. The polling data suggests the race is far from over.

There is a Trump trade, people betting on stocks and certain sectors of the market likely to benefit from Trump’s potential victory and a Republican sweep of both houses, particularly after Biden’s disastrous debate performance and his subsequent attempts to try and recover.

Investors last week started taking some profits on the Trump trade when it became clear that Biden was heading for the exit, particularly after his Covid diagnosis.

The bet is that, despite all Biden’s weaknesses, the polls showed he still wasn’t being beaten. Any alternative Democratic candidate might be better and potentially beat Trump, who has his own negatives we all know about. There’s also a chance the Dems could keep the House or maybe the Senate.

If the Dems manage to keep one of the chambers of Congress, even if Kamala Harris loses to Trump, they would be able to allow Trump’s tax cuts to expire, so that will be a key consideration.

That would be bad for investments and the economy, given the Democratic Party’s left-leaning stance on economic issues, regardless of their candidate.

Depriving the nation of Trump’s economic policies, such as lower corporate taxes and deregulation, is bad for stocks, according to traders. This is why there was a broad-based sell off last week even as Trump seemed to be securing his victory at the GOP convention.

The silver lining

On the positive side, the American people will choose between the strong ticket of Trump and Vance, and the Democrats’ candidates.

According to the Wall Street Democratic Party grapevine, Kamala Harris will likely be at the top of the ticket, with a moderate running mate, potentially Pennsylvania Gov. Josh Shapiro.

One reason Biden finally stepped down is because his fundraising dried up, but now, with new candidates, the American people will have a real election with well financed candidates who are ready to spend heavily to defeat Trump.

“Donors are ready to go heavy,” said a top Wall Street executive, affiliated with the Democratic Party, just minutes after Biden made it official.

The downside: Another top Wall Street Dem revealed that the plan isn’t just to endorse Harris but for “an open convention within the Democratic Party.” Sounds appealing given Harris’ weaknesses, but this could lead to chaos.

And again, Wall Street research predicted this more than a year ago, when the DC press corps was ignoring Biden’s obvious and continuing mental and physical decline.

In other words, this thing could get ugly.

Harris may benefit mega caps and international business

CNBC’s Jim Cramer on Monday told investors about the potential market impact of a Kamala Harris administration, suggesting her policies would be more favourable for mega caps and international companies.

“If you’re looking to invest in tech, you want a world where tech has a voice in Washington, not slashed vocal chords under Trump or on mute under Biden,” he said.

 “If you own many stocks of international companies and you want to vote your portfolio, Harris is more likely to help than hurt. That’s more than I can say about everyone else.”

President Joe Biden withdrew from the 2024 race over the weekend and backed his vice president for the Democratic nomination. Harris quickly received endorsements from high-profile politicians from across the country, including former House Speaker Nancy Pelosi and California Governor Gavin Newsom.

According to Cramer, Biden saw that “big business is bad business,” but Harris may take a “more nuanced approach.” Cramer said he could see Harris establishing close communication with Big Tech leaders.

He also said Harris seems to support globalization, which could benefit companies like Taiwan Semiconductor. In contrast, former President Donald Trump and his running mate, Sen. JD Vance of Ohio. Cramer favour smaller, domestic businesses, which could be less advantageous for companies with a lot of international operations.

Biden vows to campaign hard for Kamala Harris

On Monday, President Biden said that he was “not going anywhere” and would be “fully, fully engaged,” as he promised to campaign hard to elect Vice President Kamala Harris and to use his final six months in office to continue pushing for his priorities at home and abroad.

In his first public comments since withdrawing from the 2024 race, Mr. Biden joined a meeting led by Ms. Harris at their former joint campaign headquarters at Wilmington, Del., now entirely hers. He thanked his “amazing team” for their efforts on his behalf and urged them to now focus their energies on supporting Ms. Harris.

The president, who has been out of the public eye since isolating with Covid at his vacation house in Rehoboth Beach, Del., sounded a little hoarse but strong. The White House physician reported earlier that the president was recovering well and that his symptoms were “almost completely resolved.”

“The name has changed at the top of the ticket, but the mission hasn’t changed at all,” Mr. Biden told the campaign team. “And by the way, I’m not going anywhere. I’m going to be out there on the campaign with her, with Kamala Harris. I’m going to be working like hell, both as a sitting president getting legislation passed as well as campaigning. You know, we still need to save this democracy, and Trump is still a danger to the community. He’s a danger to the nation.”

Mr. Biden appeared determined to emphasise his message, repeating the phrase “not going anywhere” three times during his four-minute address.

He said that he plans to use his remaining time in the White House to fight for more childcare, to reduce prescription drugs charges, to stem climate change and to end the war in Gaza. He is also set to meet with Prime Minister Benjamin Netanyahu of Israel at the White House later this week and expressed hope for a potential cease-fire. “I think we’re on the verge of being able to do that.”

Mr. Biden did not go into details about his decision to withdraw from the race, but he paid tribute to his team for their sacrifices and accomplishments. “I’ve been honored and humbled — I mean this from the bottom of my heart, my word as a Biden — for all you’ve done for me and my family.” Now, he said, “I’m hoping you’ll give every bit of your heart and soul that you gave to me to Kamala.”

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