Joe Biden’s decisive Super Tuesday victories have catapulted him from also-ran to the prohibitive favorite to win the Democratic presidential nomination, with predictive markets — and Wall Street — betting on the former vice president to prevail in his effort to outflank Bernie Sanders.
After a blowout win in South Carolina over the weekend, Biden’s momentum carried him to a string of impressive wins on Tuesday’s primary contests. While he lost California, the ex-Senator and VP racked up a string of shutouts across the South — including Texas.
In fact, traders attributed Wall Street’s rally on Wednesday in part to investors breathing a sigh of relief that Sanders fortunes appear to be waning. Real Clear Politics and Smarkets forecast his chances of winning the Democratic nomination at well over 60%, while U.K. betting site Paddy Politics implies a nearly 78% chance Biden will face President Donald Trump in November.
With former New York City Mayor Mike Bloomberg, Minnesota Senator Amy Klobuchar and former South Bend, Ind., Mayor Pete Buttigieg all dropping out and coalescing behind Biden’s candidacy, he appears poised to consolidate support among centrist Democrats. Oddsmakers now favor a primary contest that pits the more moderate Biden against the Vermont Senator.
“A tense night followed for the other candidates as it soon became clear this was a Sanders vs. Biden contest,” said Sarbjit Bakhshi, Smarkets head of political markets, on Wednesday.
“Biden winning Texas cemented an unbelievable resurgence, which started back in South Carolina and has continued until now - leaving him the firm favorite,” Bakhshi added.
Stocks rally — but Trump still favored
Tuesday’s victories represented a sharp reversal of fortune for Biden, who was all but written off just a week ago as Sanders — a self-described Democratic socialist whose aggressive tax-and-spend platform has unsettled Wall Street — surged in national polls.
Just last week, Smarkets and Paddy Power both had Biden’s chances languishing at the low end of the shrinking primary field. On Wednesday, the former VP surged on both platforms — and helped feed a rally in key Dow (^DJI) components.
Health insurance stocks like UnitedHealth (UNH), Pfizer (PFE) and Walgreens-Boots Alliance (WBA) spiked on expectations that Biden’s less government-centric plan won’t radically reshape the sector. Sanders has embraced a Medicare-for-All, which in theory would nationalize most — if not all — of health care.
“Health care can be a little bit more volatile as this political season plays out with the ebb and flow” of which candidate is considered the frontrunner, TD Ameritrade strategist Shawn Cruz told Yahoo Finance on Wednesday.
“I think that will intensify as we get closer to the general election, especially if its looking like a little bit of a toss-up of who’s going to win,” he told “On the Move.”
Regardless, both Smarkets and Paddy Power investors expect Trump to prevail over both Sanders or Biden — with the widening coronavirus outbreak not yet denting the president’s fortunes. Trump has a nearly 62% chance to win in November, according to Paddy Power, with Biden seen having a probability of over 36%.
In fact, Price told Yahoo Finance that one Paddy Power investor has placed a bet worth $210,000 (£165,000) on Trump’s victory — the site’s largest election bet to date.
The site’s bet on Trump dovetails with a recent investor survey by Deutsche Bank showing a whopping 95% of market participants believing that the president would win a second term. Over 60% of those respondents said it was “very likely,” according to the bank.
“Nearly 7 months from the election, it looks like [Trump] should be in good shape” based on historical metrics of unemployment and economic growth, Deutsche said — barring a “large shock” from the COVID-19 outbreak, which may yet happen.
—Yahoo Finance’s Chelsea Lombardo contributed to this article.
Javier David is an editor for Yahoo Finance. Follow him on Twitter: @TeflonGeek