Bank of America Warns November Midterms Could Reverse $9 Trillion Stock Rally
Updated
Updated · Business Insider · Aug 8
Bank of America Warns November Midterms Could Reverse $9 Trillion Stock Rally
3 articles · Updated · Business Insider · Aug 8
Summary
Bank of America told clients a "big" stock-market reversal could hit after November's midterm elections, urging investors to cut risk and favor defensive positions.
A Democratic sweep is the bank's main political risk, with strategists framing the vote as a referendum on "populist capitalism vs populist socialism" amid widening strain in the K-shaped economy.
The warning also rests on rates: BofA said a bear-case rise in Treasury yields could puncture risk assets and the AI trade, with the 10-year yield already around 4.67%, above 4.5%.
That matters because recent growth has leaned on a wealth effect from roughly $9 trillion in market gains over two years; a pullback could curb consumer spending and slow the economy.
Wall Street peers have also flagged election-season volatility, with Oppenheimer citing typical third-quarter midterm corrections and Goldman Sachs noting a median 0% S&P 500 return from Aug. 1 to Election Day since 1974.