Bank of America believes that the 2026 US midterm elections are more likely to lead to greater divergence between sectors and individual stocks, rather than significantly increasing the overall volatility of the S&P 500. Currently, S&P 500 options only factor in approximately 0.82% of the post-election single-day volatility. Historically, the average single-day absolute volatility of the S&P 500 after a midterm election is about 1.3%; however, since 1975, only 33% of the single-day volatility following a midterm election has exceeded the average daily volatility of the preceding month. In contrast, this figure is 100% for presidential elections.
