Goldman Sachs Warns S&P 500 Volatility to Expand Ahead of U.S. Midterm Elections

According to Goldman Sachs in a report covered by Investing.com on July 26, stock market volatility is likely to expand ahead of the U.S. midterm elections as economic policy uncertainty increases. Historically, the S&P 500 has shown 0% median returns from early August through election day since 1974, followed by a 6% median gain over the three months after elections as political uncertainty eases.

Goldman Sachs noted that current market conditions amplify volatility risks. Implied correlation among S&P 500 components has fallen to 9–10, the lowest level in decades, meaning individual stocks are moving sharply while index-level swings remain relatively contained. The bank also flagged Treasury yields as a key risk: the 10-year real yield has reached its highest level since 2023. A 50 basis point rise in the 10-year yield within a month could trigger significant stock market weakness, though Goldman Sachs does not expect the election result itself to dramatically shift market direction.