Updated at 15:55 EDT
President Joe Biden has dropped out of this year's presidential race, the White House said Sunday, endorsing Vice President Kamala Harris to represent the Democratic Party against Republican front-runner Donald Trump.
“It has been the greatest honor of my life to serve as your president,” Biden said in a message from his verified account on social media platform x.
“And while it has been my intention to seek re-election, I believe it is in the best interest of my party and the country for me to step down and focus solely on fulfilling my duties as president for the remainder of my term.”
Biden, 81, has seen his re-election campaign falter significantly over the past four weeks, and calls for him to step aside have quickly accelerated following his disastrous performance in last month's debate against former President Trump.
Trump, already leading in national polls and making modest gains in key states, saw his approval ratings and support rise last week after a failed assassination attempt at a campaign rally in Butler, Pennsylvania.
Biden, who had insisted he would stay in the race and beat his Republican rival, also contracted Covid for a third time last week, forcing him to isolate himself at his beach house in Rehoboth, Delaware.
Leading party figures have lined up to endorse Harris for president, including former President Bill Clinton and his wife, former Secretary of State Hillary Clinton, who narrowly lost the 2016 election to Trump.
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Statement by President Clinton and Secretary Clinton image.twitter.com/R7tYMFWbsu
— Bill Clinton (@BillClinton) twitter.com/BillClinton/status/1815102085198958657?ref_src=twsrc%5Etfw”>July 21, 2024
“Harris will have a real chance to sell herself to the American public in the second presidential debate, currently scheduled for September 10, although the Trump campaign may pull out, not wanting to go head-to-head with the former prosecutor,” Capital Economics analysts say.
Meanwhile, Republican House Speaker Mike Johnson called on Biden to immediately step down as president, saying in a statement that “if he is unfit to run for president, he is unfit to serve as president.”
Related: stock market sentiment recovers after tech stocks pullback
Biden's decision, says Gina Bolvin of Bolvin Wealth Management Group in Boston, could trigger “a whole new level of political uncertainty.”
“This could be the catalyst for market volatility that is long overdue,” Bolvin said.
The CBOE Group's VIX index, the market's benchmark volatility gauge, rose 3.7% to $16.52 in after-hours trading following news of Biden's withdrawal, near six-month highs.
At $16.52, the VIX suggests traders expect the S&P 500 to have a daily swing of about 1.03%, or about 57 points, over the next 30 days.
“Some will interpret this as greater uncertainty about what can be said about policies after the November election (although they differ on the motive),” said Mohamed El-Erian, chief economic adviser at Allianz SE and president of Queens' College, Cambridge.
“Some will see the news as already priced in by the markets given the extent to which pressure has built up over the past two weeks, but others will see this as a short-term distraction for markets at best,” he added.
“All of this means there is genuine uncertainty about how markets will – and should – react to the news,” El-Erian said.
Related: stocks face summer rout as tech rally fades and political risks rise
U.S. stocks closed firmly lower on Friday, extending Wall Street's recent sell-off into a third straight session, amid rising geopolitical risks and the fallout from last week's global IT outages.
The S&P 500, which closed its worst week since March, fell 39.5 points, or 0.71%, while the Nasdaq dropped 144 points, or 0.81%, to extend its five-day decline beyond 4%.
More economic analysis:
- June jobs report bolsters bets on Fed rate cut in fall
- Biden's debate failure boosts Trump, but economy may be tougher opponent
- First-half market gains come with a hint of investor unease
Meanwhile, the Dow fell another 377 points but managed to hold on to a weekly gain of 0.37% thanks in part to big shifts out of technology stocks toward industrial and domestic-focused companies ahead of the midweek plunge.
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This chart now takes on a whole new meaning.
stocks do well in the second half of the year, when a president is up for re-election.
Not so much if not. https://t.co/WwoY5frmbf image.twitter.com/4kusuWtLZD
— Ryan Detrick, CMT (@RyanDetrick) twitter.com/RyanDetrick/status/1815087797042311590?ref_src=twsrc%5Etfw”>July 21, 2024
Markets will face a number of important tests this week, with Tesla earnings (TSLA) Google father Alphabet (GOOGL) and amazon (amazon.com) as well as GDP and inflation data.
Biden's departure, meanwhile, will add another layer of complexity to a market now grappling with the prospect of rate cuts by the Federal Reserve, slowing economic growth and weakening corporate profits.
Related: Veteran fund manager sees world of trouble ahead for stocks
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