{"id":806920,"date":"2026-08-08T14:59:06","date_gmt":"2026-08-08T14:59:06","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/806920\/"},"modified":"2026-08-08T14:59:06","modified_gmt":"2026-08-08T14:59:06","slug":"midterm-elections-could-be-a-big-turning-point-for-the-stock-market-bofa","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/806920\/","title":{"rendered":"Midterm Elections Could Be a ‘Big’ Turning Point for the Stock Market: BofA"},"content":{"rendered":"

The bull market<\/a> could run into its next big hurdle in a few months’ time, Bank of America says.<\/p>\n

Strategists flagged the risk of a “big” reversal in stocks following the midterm elections in November. In a recent note to clients, the bank pointed to the possibility of a Democratic sweep in Congress as the election amounts to a “referendum on populist capitalism vs populist socialism.”<\/p>\n

A team led by Michael Hartnett wrote in a note on Friday that investors should eschew risky assets and head into defensive investment<\/a> in the near-term.<\/p>\n

He added that the bank likes gold as an investment to hedge risks of the K-shaped economy and an electorate that delivers an “it’s the economy, stupid” midterm result.<\/p>\n

Economic dissatisfaction has been a growing concern for the lower leg of the K-shaped economy<\/a>, which refers to the widening gap between the top earners and lower- to middle-income households. While top earners are benefiting from higher stock and real estate prices, many lower- to middle-income Americans are feeling the cumulative effects of hotter inflation and a tough job market<\/a>.<\/p>\n

Recent growth in the economy has largely been fueled by the wealth effect from higher stock prices<\/a>, BofA strategists said, pointing to the $9 trillion in market gains investors have seen over the past two years. A reversal in the market is a risk to economic growth, as dwindling wealth on paper could cause consumers to rein in spending.<\/p>\n

Separately, the bank floated the possibility that yields could move higher as investors continue to worry about inflation and the country’s fiscal outlook. In a bear-case scenario, yields could reach levels that would materially weigh on risk assets, leading the AI bubble<\/a> to pop.<\/p>\n

“Bonds end booms and bubbles, and this one ends once ‘higher yields-lower dollar’ vigilante event forcing fiscal policy U-turn, and asset allocation from stocks to bonds rise,” strategists said, adding that rising yields<\/a> are a “canary in the coalmine” they’re watching.<\/p>\n

Yields have already started to rise as investors fret over hotter inflation<\/a>, though the increase so far has been tolerated by markets. The 10-year US Treasury yield<\/a> is sitting at around 4.67%, above the 4.5% psychological threshold closely watched by investors.<\/p>\n

Other forecasters on Wall Street have flagged the potential for a surge in volatility as the midterm election approaches.<\/p>\n

In midterm years when the president is in his second term, the S&P 500 tends to see a correction in the third quarter, analysts at Oppenheimer<\/a> said in a previous note.<\/p>\n

In all midterm years since 1974, the S&P 500 has seen a median return of 0% from August 1st through the election day in November, strategists at Goldman Sachs<\/a> said in a past report.<\/p>\n","protected":false},"excerpt":{"rendered":"The bull market could run into its next big hurdle in a few months’ time, Bank of America…\n","protected":false},"author":2,"featured_media":806921,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[3744,22747,32263,28,272597,2995,133896,62113,19079,342504,6208,1169,93389,242215,2394,18391],"class_list":["post-806920","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bank","tag-bond","tag-bull-market","tag-business","tag-hot-inflation","tag-investor","tag-k-shaped-economy","tag-midterm-election","tag-november","tag-recent-note","tag-risk","tag-stock-market","tag-strategist","tag-wealth-effect","tag-year","tag-yield"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/806920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=806920"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/806920\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/806921"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=806920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=806920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=806920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}