How Wall Street analysts think the midterms could affect stocks
Summary
Wall Street analysts say stocks have often risen in the months after midterm elections, while divided government can limit major policy changes and make the outlook more predictable. They also warn that debt-ceiling disputes, government shutdowns and higher Treasury yields could unsettle markets; a Democratic victory could affect regulators and congressional oversight, though President Trump can veto legislation.Key Facts
- Edward Jones data shows the S&P 500 rose an average of 1.7% in the month after the previous 14 midterm elections, dating back to 1970.
- The S&P 500 gained an average of 15.5% in the six months after those elections, according to Edward Jones.
- Analysts say divided government can limit sweeping tax and spending legislation and reduce policy uncertainty.
- Economists warn that fiscal disputes or increased government borrowing could unsettle bond investors and push Treasury yields higher.
- The Bipartisan Policy Center estimates the United States could reach its debt limit between late winter and midsummer 2027.
- Ed Yardeni said continued reliance on executive authority could limit Democrats’ ability to restrain President Trump, even if they control Congress.
- Analyst Jaret Seiberg said a Democratic Senate majority could give Senator Elizabeth Warren the chance to chair the Senate Banking Committee and could affect appointments to independent agencies.
- UBS analysts said the president’s veto power would limit what Congress could enact at the federal level.
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