Goldman Sachs Anticipates Increased S&P 500 Volatility Before U.S. Midterm Elections
Goldman Sachs has warned that the S&P 500 is likely to experience increased volatility in the months leading up to the upcoming U.S. midterm elections, citing historical patterns of rising economic policy uncertainty during this period. The bank's strategists noted that such uncertainty typically peaks around August and remains elevated through election season. The firm highlighted that while current low correlations between individual stocks have kept index-level volatility subdued despite high stock-specific movements, this dynamic is expected to shift as the earnings season ends. Goldman Sachs also pointed out historical trends showing limited S&P 500 returns in the months before midterms but improved performance afterward. Investor behavior has historically mirrored these patterns, with mutual funds and foreign investors typically reducing U.S. equity exposure ahead of elections and rebuilding it post-election.