As more and more senior Democratic senators openly advise, Biden's efforts to seek re-election have been repeatedly frustrated, and now the 81-year-old incumbent president of the United States is undoubtedly in the most dangerous moment of this round of the election.

Many local American media reported on Thursday that some senior Democratic Party officials believe that pressure from party members and confidants may persuade Biden to withdraw from the election as early as this weekend.

If President Biden withdraws from the 2024 election, what will happen to the US stock market? It is still unknown at this point.

However, many insiders have begun to try to find the answer from historical experiences.

Looking back over the past few decades, the last time a US president announced he would not seek re-election was Lyndon B. Johnson in 1968.

Earlier this month, Texas Democratic Representative Lloyd Doggett was the first person to publicly urge Biden to withdraw, citing Johnson's precedent from more than half a century ago. Doggett said that after the Vietnam War's impact on Johnson's sharp decline in support, former President Lyndon Johnson took the initiative to withdraw, and "President Biden should do the same."

So how did the American stock market perform after Johnson withdrew from the election?

On the surface, if Biden really announces his withdrawal next, historical similarity seems to be a good sign for the stock market- on March 31, 1968 (Sunday), Johnson announced his withdrawal from the 1968 election; the market rose sharply by 2.5% the next day. $S&P 500 Index (.SPX.US)$As for the performance of the entire year of 1968, Johnson's withdrawal was almost close to the low point of the US market in 1968: by the end of that year, the S&P 500 index had accumulated a rise of 15.1%!

Interestingly, there is more than one similarity between the 1968 and this year's election.

In the 1968 US election, a popular candidate was also assassinated- in the early hours of June 5, 1968, US Senator Robert Kennedy (brother of former US President John F. Kennedy, who was assassinated in 1963) was shot in the Ambassador Hotel in Los Angeles, California. He had just won the primaries in California and South Dakota and was expected to be nominated as the Democratic Party's candidate for the US president. 26 hours later, he died at the Samaritan Hospital at the age of 42.

If Biden withdraws from the election, will the US stock market still rise?

So, if all coincidences happen, will the market rise experience of 56 years ago be repeated this year?

From the perspective of the performance of the US stock market, as we introduced earlier this month, the performance of the US stock market in the past few months has indeed begun to maintain a positive correlation with the probability of Trump's victory in the November election, mainly because the market seems to be positive for any candidate's prospect of "definite victory."

However, in the past week or so, with a series of tough statements by Trump on tariffs and foreign policy, the market's risk aversion has increased, and the speculation about whether Biden will withdraw from the race has continued to heat up, causing the US stock market to appear for a few days of turbulence, which has also made many investors unable to remain completely calm.

In this regard, Mark Hulbert, a American financial analyst, also believes that there are many differences between 1968 and now from multiple perspectives, making it unlikely that the market will react in the same way as it did then:

He cited the remarks of historian Holland. Recently, Holland said in an interview that "although there are some similarities between Johnson's withdrawal in 1968 and Biden's possible withdrawal today on the surface, there are also profound differences between the two. Johnson's withdrawal at the time surprised most people outside the inner circle; the public did not have a wide range of speculations in advance, nor did they have any anticipation. In contrast, today's calls for Biden to stop running are made publicly."

Hulbert pointed out that Hollander's above observations are meaningful because the core feature of an efficient market is that events that have been widely expected are often reflected in stock prices. Therefore, even if you think Johnson's announcement of withdrawal is the reason for the significant rise in the S&P 500 index in 1968, you cannot draw the conclusion that the market today will react in the same way...

Hulbert also said that in 1968, Johnson's decision to withdraw was not the only reason for the market to rise. Almost simultaneously with his decision to withdraw, Johnson also announced the unilateral cessation of partial bombing of North Vietnam, and was prepared to negotiate at any time - considering that the anti-war sentiment in the United States was already very high at the time, almost the root cause of serious social division, this may be the main reason for the final push of the US stock market.

Hulbert also mentioned another difference between 1968 and today is the mood of the stock market.

His conclusion was based on the " Sentiment Index" of Investors Intelligence. As far as he knew, this is the only indicator capable of measuring market sentiment dating back to the 1960s. The latest reading of the indicator before Johnson announced his withdrawal showed that only 10.3% of monitored market participants were bullish on the market - a very low proportion. And according to the interpretation of reverse reactions, the universally bearish market is often a bullish signal. Therefore, the strong performance of the stock market after Johnson's withdrawal can also be attributed to this reverse reaction.

Currently, according to Hulbert's latest observations, the market's bullish sentiment has reached or is close to historical highs. Compared with the withdrawal of Johnson in 1968, the current bullish sentiment in the stock market may actually constitute a strong resistance to the future direction of the market, which will also weaken any positive reaction in the market in the future.

Hulbert concluded that Wall Street analysts often like to quote Mark Twain's famous saying, "History does not repeat itself, but it rhymes." But in the current situation, comparing Johnson's withdrawal with Biden may not have much historical commonality for the market to rhyme.

Editor/ping