Mid-Term Elections and the possible effect on the US markets
The US midterms can change Congress. They do not change the president.
That distinction matters when thinking about the stock market.
Republicans keeping the House and Senate means unified government. Democrats winning both means a Democratic Congress working with a Republican president. One chamber each also means divided government, with different powers depending on who controls the Senate.
So what does history show?
J.P. Morgan’s study of 1937–2025 reports average annual S&P 500 total returns of:
→ 16.3% under a Republican president with unified Republican government.
→ 9.4% under a Republican president with divided government, where the opposition controlled at least one chamber.
The source chart lists 9 calendar-year observations for the first group and 32 for the second. These are unequal samples from different economic environments—not independent experiments showing that a party caused a return.
Neither figure is a forecast for the 12 months after this election. The divided-government group also combines Democratic control of both chambers with split Congress; it does not provide separate return estimates for those outcomes.
Elections can change taxes, spending, policy uncertainty and appointments. Company earnings, inflation, interest rates and valuations still matter.
In this two-minute Finance Butler sketchbook explainer, I open Washington’s three-door control room and walk through the different outcomes.
Is your portfolio following the economy—or the election headlines?
The Finance Butler — Daniel Phang
Source: J.P. Morgan Asset Management, 2026 Midterm Election Hub, annual stock-market returns by political party control. S&P 500 total returns, including dividends, 1937–2025; source data as of 23 October 2026.
https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-themes/us-elections/
Institutional background: US House of Representatives legislative process and US Senate nominations guidance.
Prepared 2 November 2026. Educational content only; not financial advice or a forecast. Past performance does not guarantee future results.
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