Goldman Sachs strategists expect S&P 500 volatility to increase in the coming months as the US midterm elections, now three months away, become a more influential driver of market sentiment. They note that historical trends show economic policy uncertainty typically rises in the August leading up to midterm elections.

Historically, the S&P 500 has delivered limited gains in the months before US midterm elections, with a median return of 0% between early August and Election Day across 13 cycles since 1974. However, returns have generally improved post-election, with a median gain of 6% during the subsequent three months.