What Congress Looks Like Today
Republicans currently hold narrow majorities in both the House and Senate. Democrats need only modest gains to retake control of one or both chambers, making the balance of power particularly competitive. Polling and political analysts increasingly view a Democratic gain in the House as a realistic possibility, while the Senate remains highly contested.
Because major legislation often requires cooperation across party lines, even a small shift in congressional control can affect the president’s agenda. However, with President Trump in the White House, any major legislative proposals would still require presidential approval, limiting the likelihood of sweeping policy changes.
A more likely scenario may be divided government, in which Democrats gain one chamber while Republicans retain the other. Historically, investors have often viewed divided government favorably because it limits the chances of major policy changes that could disrupt businesses or markets.
How Midterm Elections Have Historically Impacted Markets
An interesting observation is that markets tend to follow a pretty consistent pattern during midterm election years. Historically, stocks have experienced increased volatility during the months leading up to Election Day. Investors dislike uncertainty, and questions surrounding future tax policy, government spending, regulation, and economic priorities can contribute to market fluctuations. This year, we also have the ongoing conflict with Iran to consider, and its impact on oil and gas prices. However, once election results become known and uncertainty begins to fade, markets have frequently delivered stronger returns.
Since 1950, the S&P 500 has averaged approximately 15% gains during the 12-month period following midterm elections. Even more impressive, market performance after midterms has often exceeded average returns during other years of the presidential cycle.
There are several reasons why this may occur, including the removal of election uncertainty, as well as businesses and investors gaining greater clarity regarding future policy direction.
Does Party Control Determine Market Performance?
One of the biggest misconceptions among investors is that one political party is consistently better for the stock market than the other.
Historical data shows that, over long periods, stocks have generated substantial gains under both Democratic and Republican administrations. Markets have also performed well under both single-party and divided government. While individual policies may affect specific industries, no reliable evidence suggests investors can consistently improve results by making investment decisions based on election outcomes.
The reason is relatively simple: markets respond to many factors beyond politics. Corporate earnings, interest rates, inflation, technological innovation, productivity, consumer behavior, and global economic conditions often exert far greater influence on stock prices than congressional elections.
Election results matter, but they are only one piece of a much larger economic puzzle.
Looking Ahead
History offers an encouraging message for investors during election years. Midterm elections can create uncertainty and market volatility in the short term, but they have generally had limited impact on the market’s long-term trajectory.
The economy and stock market have advanced under Republican administrations, Democratic administrations, divided governments, and single-party majorities. While the political landscape may change this November, the factors that ultimately drive wealth creation remain largely unchanged. It’s important to remember that elections come and go, but long-term market growth has remained remarkably resilient throughout generations of political change.
See you at the polls!
MidTerm Elections and the Stock Market
by Bruce Hoffman
I can’t believe that it will be 40 years ago this November when I cast my first vote in an election. I turned 18 in the summer of 1986 and was looking forward to being able to participate in the electoral process. That election was also a midterm election in the second term of Reagan’s presidency.
As the 2026 midterm election approaches, many investors are wondering what the results could mean for the stock market, the economy, and their portfolios. Election headlines often dominate the news cycle, and political debates can create uncertainty. Yet history suggests that while elections may influence short-term market sentiment, they rarely determine long-term investment outcomes.
Understanding how markets have historically responded to midterm elections can help investors separate political noise from economic reality and make more informed financial decisions.
Why Midterm Elections Matter
Midterm elections occur halfway through a president’s four-year term and can determine control of Congress given that the House of Representatives operates on a two-year term. Historically, these elections have often served as a referendum on the sitting president’s performance, particularly with regard to the state of the economy.
One of the most consistent trends in American politics is that the president’s party typically loses congressional seats during midterm elections. Over the past several decades, the party occupying the White House has generally lost House and Senate seats as voters seek to lay blame for failures by the party in charge. This dynamic frequently leads to divided government, where one party controls the White House and another controls at least one chamber of Congress.
What Congress Looks Like Today
Republicans currently hold narrow majorities in both the House and Senate. Democrats need only modest gains to retake control of one or both chambers, making the balance of power particularly competitive. Polling and political analysts increasingly view a Democratic gain in the House as a realistic possibility, while the Senate remains highly contested.
Because major legislation often requires cooperation across party lines, even a small shift in congressional control can affect the president’s agenda. However, with President Trump in the White House, any major legislative proposals would still require presidential approval, limiting the likelihood of sweeping policy changes.
A more likely scenario may be divided government, in which Democrats gain one chamber while Republicans retain the other. Historically, investors have often viewed divided government favorably because it limits the chances of major policy changes that could disrupt businesses or markets.
How Midterm Elections Have Historically Impacted Markets
An interesting observation is that markets tend to follow a pretty consistent pattern during midterm election years. Historically, stocks have experienced increased volatility during the months leading up to Election Day. Investors dislike uncertainty, and questions surrounding future tax policy, government spending, regulation, and economic priorities can contribute to market fluctuations. This year, we also have the ongoing conflict with Iran to consider, and its impact on oil and gas prices. However, once election results become known and uncertainty begins to fade, markets have frequently delivered stronger returns.
Since 1950, the S&P 500 has averaged approximately 15% gains during the 12-month period following midterm elections. Even more impressive, market performance after midterms has often exceeded average returns during other years of the presidential cycle.
There are several reasons why this may occur, including the removal of election uncertainty, as well as businesses and investors gaining greater clarity regarding future policy direction.
Does Party Control Determine Market Performance?
One of the biggest misconceptions among investors is that one political party is consistently better for the stock market than the other.
Historical data shows that, over long periods, stocks have generated substantial gains under both Democratic and Republican administrations. Markets have also performed well under both single-party and divided government. While individual policies may affect specific industries, no reliable evidence suggests investors can consistently improve results by making investment decisions based on election outcomes.
The reason is relatively simple: markets respond to many factors beyond politics. Corporate earnings, interest rates, inflation, technological innovation, productivity, consumer behavior, and global economic conditions often exert far greater influence on stock prices than congressional elections.
Election results matter, but they are only one piece of a much larger economic puzzle.
Looking Ahead
History offers an encouraging message for investors during election years. Midterm elections can create uncertainty and market volatility in the short term, but they have generally had limited impact on the market’s long-term trajectory.
The economy and stock market have advanced under Republican administrations, Democratic administrations, divided governments, and single-party majorities. While the political landscape may change this November, the factors that ultimately drive wealth creation remain largely unchanged. It’s important to remember that elections come and go, but long-term market growth has remained remarkably resilient throughout generations of political change.
See you at the polls!
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