Here’s how much stocks could fall if the Democrats sweep Congress, according to BofA

Bank of America's chief equity strategist, Michael Hartnett, has flagged the rising probability of a Democratic sweep in the midterm elections as a "meaningful" threat to risk appetite. In a note to clients, Hartnett outlined how much stocks could fall under such an outcome, framing the scenario as a key variable for investors to weigh as polling and prediction markets shift.

The relevance here is less about any single party and more about what divided versus unified government tends to mean for policy. A sweep could open the door to changes in tax, spending, and regulatory priorities that markets would need to price in, while a split Congress typically implies gridlock and fewer legislative surprises. That policy uncertainty, rather than the election result itself, is what feeds into equity valuations.

What to watch: how prediction markets and polling averages move in the coming weeks, and whether positioning data suggest investors are already hedging the scenario. Historically, midterm volatility has often clustered around the event before fading, but the magnitude of any move depends on how much of the outcome is already reflected in prices.