TLDR
- The S&P 500 has risen in the six months after every midterm election studied by Charles Schwab, with an average gain of 12.4%.
- Kalshi puts the odds of Democrats winning both the House and Senate at 73%.
- Coin Bureau data shows average gains of 17.5% six months after midterms that shifted congressional power.
- Morgan Stanley says the stock market correction that began in June may be nearing its end.
- Inflation worries, high energy prices and tensions involving Iran remain risks for investors.
US voters head to the polls for the midterm elections on November 3. Investors are watching closely to see how a possible shift in power could affect the stock market.
The midterms could spark an S&P 500 RALLY.
President Trump could lose both the House and Senate with the probability of Democrats winning both chambers rising to 73%, per Axios.
That would leave Trump facing an opposition-controlled Congress.
History offers a bullish backdrop,… pic.twitter.com/lnSVWckV8N
— Coin Bureau (@coinbureau) November 3, 2026
President Donald Trump faces the chance of losing Republican control of Congress. Axios reported that prediction market Kalshi puts the odds of Democrats winning both the House of Representatives and the Senate at 73%.
That would mean an opposition-controlled Congress for the last two years of Trump’s term. Analysts say history offers some clues about how stocks may react.
History Shows Gains for the S&P 500 After Midterms
Crypto news platform Coin Bureau shared data on how the S&P 500 has done after midterms that changed which party controls Congress. It said the index gained an average of 2.1% after one month and 10.7% after three months.
The average gain was 17.5% after six months and 15.5% after one year. Coin Bureau said this situation has happened only seven times since 1954.
The index was higher one year later in all seven cases. The platform did not explain how it calculated these figures.
Research from Charles Schwab points in the same direction. It found the S&P 500 gained an average of 12.4% in the six months after midterm elections from 1974 to 2022.
The index rose in the six months after all 13 elections in that study. Over three months, the average gain was 5.7%, with gains in 11 of the 13 periods.
One explanation is that elections remove political uncertainty. Investors can then focus more on company earnings, economic growth and interest rate policy.
A divided Congress can also make it harder to pass large new laws. That may give businesses a more predictable setting.
Past results do not guarantee future returns. Economic conditions differ from one election cycle to the next.
Wall Street Weighs Opportunity and Risk
Morgan Stanley published a research update on November 2. Its strategists said the US stock market correction that began in June may be close to ending.
The bank said large-cap US stocks have gained about 15% on average in the six months after midterm elections. It also said a Democratic win is already mostly reflected in market expectations.
In its view, removing election uncertainty may matter more than the result itself. Not every factor looks favorable, though.
US stocks have faced pressure from concerns about artificial intelligence spending and company valuations. Geopolitical tensions have also weighed on the market.
Higher Treasury yields and elevated energy prices have added doubts about inflation. They have also raised questions about the Federal Reserve’s next interest rate moves.
Renewed tensions involving Iran, possible trade tariffs and disputes over government spending could also hurt investor confidence. A Democratic sweep could lead to more political fights over federal budgets, regulation and the debt ceiling.
With a Democratic win already widely expected, the election result alone may not drive a lasting rally. Corporate earnings, inflation and Federal Reserve policy are still expected to shape how the S&P 500 performs into 2027.
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