Bank of America warns stocks could slide over 10% if Democrats sweep Congress

Bank of America strategist Michael Hartnett has a message for anyone treating the November 2026 midterms as background noise. In a note from mid-August 2026, he outlined a scenario in which US equities could fall by more than 10%. The trigger would be a Democratic sweep of both chambers of Congress, paired with a Democratic win in the Texas governor’s race. Hartnett describes the midterms as pivotal for the direction of US stocks, with the AI sector squarely in the crosshairs. His framework splits the outcome into two very different paths. Two scenarios, two very different markets In the first path, Democrats take the House and the Senate, and a Democrat also wins the Texas governorship. Hartnett says that combination could knock US equities down by over 10%. He also flags that this environment might bring significant downside risk for AI stocks. It could also put pressure on the dollar and on Treasury yields. The second path looks almost like the mirror image. If Republicans hold the Senate and Texas Governor Greg Abbott wins re-election, Hartnett anticipates a potential rally in equities. AI-related stocks would be the main beneficiaries in that case. Hartnett suggests the run co...