Is the U.S. stock market showing signs of nervousness due to President Joe Biden stepping aside for Vice President Kamala Harris, who is performing much better than expected in the polls against Donald Trump?

This question arises as market participants seem to be re-evaluating the political landscape and its potential impact on economic policies. Recent polling data indicates that Kamala Harris is nearly tied with Donald Trump in the upcoming presidential election, creating uncertainty among investors and traders.

A report published by The New York Times (NYT) on 25 July, titled “Harris Narrows Gap Against Trump, Times/Siena Poll Finds,” reveals that the race is a virtual tie, with Trump leading Harris by a slim margin of 48% to 47% among likely voters. This is a significant shift from earlier polls, where Biden trailed Trump by six percentage points.

The stock market’s reaction to these political developments has been mixed. As of 3:20 p.m. EDT on July 25, the Dow Jones Industrial Average was up 253.63 points (0.64%), the S&P 500 Index was up 5.73 points (0.11%), and the Russell 2000 Index was up 32.95 points (1.51%).

Despite these gains, the market has experienced volatility and uncertainty since Biden’s withdrawal from the race on July 21.

Investors might be concerned about a potential Harris presidency, fearing she might not be as market-friendly as Trump. Trump’s policies, which include deregulation and corporate tax cuts, have generally been perceived as beneficial to the market. In contrast, Harris is viewed as more likely to implement regulatory measures and policies that could impact corporate profits.

The political shift has created a scenario where the market must consider the implications of a Harris administration versus a second term for Trump. The uncertainty around Harris’s economic policies and the possible changes they could bring might be causing this nervousness among market participants.

As the election approaches, the market will continue to react to polling data and political developments. The question remains: is the U.S. stock market’s current nervousness a reflection of traders and investors realizing that Kamala Harris has a decent chance of beating Donald Trump? Only time will tell as we move closer to November 2024.

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