US Midterms: What The Election Could Mean for Stocks

Americans head to the polls today with prediction markets leaning heavily towards a Democratic takeover of Congress. 

Kalshi traders put the Democrats' chances of winning the House at 94% and the Senate at 74% on Monday afternoon, while Polymarket priced a clean Democratic sweep at 74%. If that plays out, President Trump would face a hostile Congress for his final two years in office, a combination with a weak long-run track record for US stocks. 

What's at Stake: Senate vs House 

All 435 House seats and 35 of the 100 Senate seats are up for grabs. 

Republicans hold the House 218 to 214, with one independent sitting with them and two vacancies, so Democrats need a net gain of just three seats to reach the 218 majority. A Democratic House would gain subpoena power over the administration and real leverage over spending, including the next debt-ceiling deadline, expected around mid-2027. 

The Senate is the tougher climb, with Republicans holding 53 seats to the Democrats' 47 (including two independents), so Democrats need a net gain of four. A 50-50 split would leave Republicans in charge through Vice President JD Vance's tie-breaking vote, and the Senate is the chamber that confirms judges, cabinet picks and Fed nominees. 

The key Senate races include Maine, North Carolina, Michigan, New Hampshire, Georgia, Alaska, Iowa, Ohio and Texas. Georgia could go to a 1 December runoff if no candidate clears 50%, so Senate control may not be settled tonight. 

Which Washington Mix Has Been Best for Stocks? 

History favours gridlock, but not every kind of gridlock. 

In data going back to 1932, a Republican president facing a Democratic or split Congress has been the weakest combination, with average annual S&P 500 price returns of around 5%. Republican sweeps, and Democratic presidents working with a split or Republican Congress, have each averaged around 13%. 

The samples are small and the results shift with the start date: measured from 1951, a Republican president with a divided Congress has averaged closer to 14%, so these averages are no forecast. Midterms have also tended to clear the decks for stocks, with the S&P 500 posting a positive return in the 12 months after every midterm election since 1946. 

Sector Winners and Losers by Outcome 

The headline index may care less about who wins than the sectors underneath it. 

With President Trump keeping his veto, a Democratic Congress would struggle to rewrite existing policy, so the bigger shifts would come through oversight, hearings and spending fights rather than new laws.  

That puts pharma, banks and Big Tech in the firing line for investigations, while Democrats' push to reverse the Medicaid cuts in the One Big Beautiful Bill would help hospitals and Medicaid-focused insurers. 

A Republican hold keeps the deregulation, fossil-fuel permitting and light-touch AI agenda intact, which favours oil and gas, banks and tech over clean energy. A split Congress sits in between, with defence and industrials tending to benefit from bipartisan spending support. 

Oil remains the wild card. The energy sector is up around 50% this year on the back of the US-Israel war on Iran, a move driven far more by crude prices than by Washington. 

Sector ETF Scorecard 

The sector leaderboard has flipped hard in the run-up to the vote. 

Technology (XLK) is still among the year's top performers but has dropped more than 13% over the past month, while defensives such as consumer staples (XLP), healthcare (XLV) and utilities (XLU) have each gained around 10% or more. Communication services (XLC) is the worst performer of 2026 so far, down around 15%. 

Price performance to Monday's close, 2 November 2026. 

What to Watch Tonight 

The first polls close at 6pm ET (23:00 GMT), with results coming in through the early hours of Wednesday in Europe. 

Georgia, Virginia and South Carolina close at 7pm ET (midnight GMT), followed by North Carolina and Ohio at 7:30pm ET, then Maine, Pennsylvania and most of Michigan and Texas at 8pm ET. California closes at 11pm ET (04:00 GMT) and Alaska's last polls at 1am ET (06:00 GMT), so the tightest Senate races may not be called until well into Wednesday's European session.