By: Victor Tang

President Biden announced in a letter distributed Sunday afternoon he would step down from the 2024 Democratic presidential nomination and officially endorsed Vice President Kamala Harris to become the party’s nominee and the role of the Democratic nominee for president.

In response, Harris said she is honored and plans to “earn and win” the nomination. As the party’s candidate, Harris has prompted investors and economists to reassess the campaign’s impact on everything from the stock market to the so-called “Trump Trade.”

Prior to Biden’s Sunday decision, former President Trump had gained an edge in the polls, securing his largest national lead over Biden until then. That tailwind helped spark the Trump trade, which describes a strategy to invest in the assets and stocks that investors believe could profit under a Republican White House.

But now, Wall Street is sizing up the new landscape and examining Harris’ economic policies and views, The Democratic presidential candidate could ultimately result in a tighter race than had been predicted before Biden’s decision, which could spark more volatility across U.S. markets as investors try to gauge which party — and their economic policies — will win out in November, investors said.

“U.S. politics will be far more unpredictable for at least the next three months than investors had expected — and this heightened uncertainty is bound to be bearish for most assets, especially those priced for perfection, with valuations that assume predictability in a world where we should expect the unexpected,” said Anatole Kaletsky, co-founder and chief economist of investment advisory firm Gavekal, in a research note.

Overall, Harris had entered the race.